Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Monday 8th April at Seven o'clock.

BURMAH-TOTAL REFINERIES TRUST BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Tuesday next at Seven o'clock.

CLIFTON SUSPENSION BRIDGE BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Tuesday next at Seven o'clock.

RENFREW COUNTY COUNCIL ORDER CONFIRMATION BILL

Order for consideration read.

To be considered upon Tuesday next.

Oral Answers to Questions — SOCIAL SERVICES

Policy Objectives

Mr. Molloy: asked the Secretary of State for Social Services if she will make a statement on her principal policy objectives.

The Secretary of State for Social Services (Mrs. Barbara Castle): My hon. Friend will have observed that in my speech during the debate on the Address I declared my immediate priorities. I shall develop my principal policy objectives in speeches from time to time both in the House: and elsewhere.

Mr. Molloy: I wish my right hon. Friend well in the massive undertakings that she will endeavour to achieve. Is she aware of the grave frustration in the nursing profession, which could constitute a threat to the National Health Service, due to the fact that recently the profession was given an award which in only a few days was swallowed up by meal price increases in nurses' hostels and in hospitals? In an endeavour to avert the crisis, will my right hon. Friend order an investigation into the nursing profession?

Mrs. Castle: I share my hon. Friend's appreciation of the tremendous importance of the nursing profession to the National Health Service. I shall be giving consideration to its future rôle. My hon. Friend is not quite correct in saying that the award was swallowed up by meal price increases. He is no doubt aware that these increases were negotiated through the Whitley machinery some time ago.

Mr. Goodhew: Does the right hon. Lady expect to press these policies as she announces them to the same final conclusion as she did her previous policy when she announced "In Place of Strife"?

Mrs. Castle: I assure the hon. Gentleman that I shall press my policies with the same speed with which I published a number of reports that had lain in the archives of the Department before I took over.

Mr. Christopher Mayhew: Is my right hon. Friend aware of the contrast between the admirable statements by the Government on the problems of the disabled and the physically ill and the omission from the Queen's Speech and the virtual omission from her speech on the Address of any reference to the problems of the mentally ill? Will she assure the House that she will pay equal attention to the grave problems of the mentally sick?

Mrs. Castle: My hon. Friend is being unfair. If he will refer to my speech on the Address he will find that I stated that we had to work out new priorities in the National Health Service to cover the present areas of neglect. I specifically referred to the problems of mental health and the mentally handicapped.

Sir G. Howe: Will the right hon. Lady assure the House that she will be pressing ahead with proposals for the introduction of a tax credit scheme as the most effective way of meeting the very important areas of need while reducing the incidence of means tests? Will she also tell us what she proposes to do about the family income supplement scheme?

Mrs. Castle: The right hon. and learned Gentleman is aware, from my activities on the Select Committee on the previous administration's scheme, that my colleagues and I consider that scheme has serious defects and that we would not wish to introduce it in its present form. I ask the right hon. and learned Gentleman to await statements that I shall be making later on the family income supplement.

Mentally Handicapped Persons (Services)

Mr. Christopher Mayhew: asked the Secretary of State for Social Services what action she proposes for improving community services for the mentally ill and handicapped.

Mr. Moonman: asked the Secretary of State for Social Services if she will give early consideration to a full and detailed review of all after-care services for the mentally sick, including proposals for their improvement.

The Under-Secretary of State for Health (Dr. David Owen): I am well aware of the wide gap between need and

existing provision of community services for both these groups, and I consider that high priority should be given to the improvement of these services. Full weight will be given to this in the allocation of resources and my right hon. Friend will be making a statement later.

Mr. Mayhew: I thank my hon. Friend for that reply. Will he bear in mind that tens of thousands of people are in psychiatric hospitals, not because they can benefit from the treatment there or because they need custodial care but simply because there is nowhere better for them to go? Is he aware of the great experience in protected residential accommodation in the community? People not only enjoy life more, at less public cost, but make medical and nursing facilities available at the hospitals for those who need them.

Dr. Owen: I am aware of that fact, and guideline figures handed to local authorities in 1972 gave an estimated need for England of about 12,000 local authority residential places and 30,000 day places for the mentally ill. The present provision is about 2,100 residential places, supplemented by about 1,300 local authority places in voluntary homes and about 3,700 day places, so we have a long way to go.

Mr. Burden: Will the hon. Gentleman give an undertaking that he will consider the provision of a school for mentally handicapped children at Bobbing, in Kent, which is already under consideration and which is urgently needed in that area?

Dr. Owen: If the hon. Gentleman writes to me on that matter, I shall give urgent consideration to it.

Mr. Moonman: I congratulate my hon. Friend on his appointment. Care of the mentally sick is not a political question. Will my hon. Friend also take into account the fact that the information available is inadequate and out of date, and in the important report that he has mentioned will he take into account the adolescents who would not be in hospital if the necessary services and facilities were available for them elsewhere?

Dr. Owen: I thank my hon. Friend for his opening comment. His interest in this matter is well known. We shall


consider the question of adolescents, which is a worrying one, and in framing the statement we shall consider all aspects of the mentally ill and handicapped.

Mr. Raison: Will the hon. Gentleman keep a close eye on the links between hospital services and local authority services, which, incidentally, should have been made better by the recent reform of the National Health Service?

Dr. Owen: It has always been the Labour Party's view that these links need to be very close. It is a matter of public knowledge that we tend to think that they should be even closer than envisaged in the reorganisation.

Attendance Allowance (Disabled Children)

Mr. Janner: asked the Secretary of State for Social Services whether she will seek powers to extend the scope of attendance allowances so as to cover cases of disabled children born with one limb only.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): The review of social security provisions for the chronically sick and disabled, which we are carrying out under Section 36 of the Social Security Act 1973, will have within its scope the problems of those who do not qualify for the present attendance allowance at either the higher or the lower rate.
This important matter is being regarded with due urgency, as my hon. and learned Friend will have seen from my right hon. Friend's speech during the debate on the Address on 15th March.—[Vol. 870, c. 523–33.]

Mr. Janner: While welcoming my hon. Friend's statement, may I ask whether he agrees that the families of seriously disabled children—such as the Martins of Leicester—deserve high priority in the Government's programme? Can he assure the House that the attendance allowance procedures will be reviewed as soon as possible?

Mr. Morris: There is little that I can add at this stage to my earlier reply. The National Insurance Commissioners have a further application before them in the case of Jimmy Martin for leave to appeal on a question of law, and it would not

be possible or proper for me to comment in detail at this stage. Our commitment to look at the whole question of disability income is a firm one in keeping with the statutory requirement.

Dr. Winstanley: Will the hon. Gentleman bear in mind in addition the plight of the seriously disabled with terminal conditions whose disability will last for the rest of their lives but who nevertheless cannot qualify for allowance until the disability has existed for six months? Some of them die before they qualify for the allowance. Will the hon. Gentleman look at that in addition?

Mr. Morris: Yes, Sir.

Pensions (Increase)

Mr. Skinner: asked the Secretary of State for Social Services when she expects the increased pension to be paid.

Mr. Arthur Lewis: asked the Secretary of State for Social Services what action she has taken to expedite the early payment of the increased retirement pension as announced by the Government; and with what results.

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): I must ask my hon. Friends to await my right hon. Friend the Chancellor of the Exchequer's Budget Statement this afternoon.

Pensioners (Fuel and Power Costs)

Mrs. Oppenheim: asked the Secretary of State for Social Services what provision she intends to make to assist pensioners with the increased cost of fuel and power.

The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown): The Government propose the largest single increase in pensions since 1946.

Mr. Skinner: On a point of order, Mr. Speaker. Why was I not called to ask a supplementary question on Question No. 5?

Mr. Speaker: There is a simple answer. The hon. Member did not rise in time.

Mrs. Oppenheim: If there are substantial increases in electricity and coal prices for domestic users, will the hon.


Gentleman ensure that pensioners are protected during the period from the start of that increase to the date of the increase in pensions? Will he also undertake to ensure that pensions are not substantially eroded by such increased costs?

Mr. Brown: Where there is poor health or bad accommodation, special weekly additions are made to provide for extra heating. The Supplementary Benefits Commission is already looking at these rates, which are 30p, 60p and 90p depending on the seriousness of the case.

Mr. Molloy: Does my hon. Friend agree that the best contribution so far has been made by my right hon. Friend the Secretary of State for Employment in resolving the serious dispute which would have affected everybody, including old-age pensioners? In the unfortunate event of there being inevitable increases, particularly in the price of coal, will my hon. Friend ensure that immediate help is provided for pensioners who run the risk of suffering from some form of infirmity and disease as well as being unable to keep themselves sufficiently warm?

Mr. Brown: I am sure that my hon. Friend would not wish to overlook my original answer, when I said that the Government propose the largest single increase in pensions since 1946. Having said that, I underline the fact that the Supplementary Benefits Commission is keeping these payments under review.

Disabled Persons (Sharp Report)

Mr. Marten: asked the Secretary of State for Social Services if she will now publish the Sharp Report on vehicles for the disabled.

Mr. Luce: asked the Secretary of State for Social Services when she proposes to publish the report of Baroness Sharp's committee on the mobility of the disabled.

Mr. Carter-Jones: asked the Secretary of State for Social Services if she will place in the Library a copy of the Sharp report on vehicles for the disabled; if she will give some indication of her attitude regarding implementing the report and if she will make a statement.

Mr. Alfred Morris: The report was published yesterday and a copy has been placed in the Library. As regards imple-

mentation, I would refer the hon. Members to the statement my right hon. Friend the Secretary of State made in the House yesterday.

Mr. Marten: Bearing in mind that mobility for the disabled is one of the really important matters in enabling them to lead a normal life, is not the Sharp Report a classic case in that, if accepted, its recommendations would provide aid where it was really needed and not distribute it unnecessarily widely? Does not the hon. Gentleman agree that the time has come for the House to accept the cost involved in the Sharp Report?

Mr. Morris: My aim was to see the earliest possible publication of the Sharp Report. My right hon. Friend has emphasised that there will be immediate and wide-ranging consultations. We intend not to talk at or to disabled people but to talk with them. I am certain that the important point made by the hon. Gentleman, whose record in this field is respected by both sides of the House, will be fully taken into account in the course of the consultation.

Mr. Carter-Jones: Is my hon. Friend aware that there is considerable concern on both sides of the House about paragraph 139 of the report which says that 13,500 people will lose the right to a four-wheel vehicle but will be able to get a three-wheel vehicle? Does he agree that the large class of people who will lose this right are not those who caused the economic crisis? Will he reconsider that paragraph of the report? Secondly, will my hon. Friend please have another look at the question of providing a mobility allowance for those who live alone? This is done in the Scandinavian countries, so why not here?

Mr. Morris: This is Baroness Sharp's report, not ours, but I give my hon. Friend the assurance that the points he has made will be taken fully into account in our consultations on the report. My right hon. Friend yesterday emphasised her concern on the second point made by my hon. Friend.

Mr. Luce: In considering this report, will the hon. Gentleman have a careful look at the criteria on elegibility for vehicles? Does he not accept that social isolation is as serious a problem for many disabled people as is, for example, the


need to support a family or to take up a job?

Mr. Morris: I spend much of my time seeking to relieve severely disabled people of the scourge of social isolation. Certainly I will look very carefully at that point.

Mr. Tuck: Is my hon. Friend aware that there is grave disquiet among disabled people who use three-wheel vehicles, first that they are unsafe, second because garages do not want to know when they try to have them serviced, and third because they cannot take their families out in them'? Will he consider this and promise an early debate on the matter so that he can get ahead?

Mr. Morris: I cannot give any undertaking about a debate—that is a matter for my right hon. Friend the Leader of the House—but in the consultations that we shall be having we shall take full account of the safety aspects of the debate that we have had so far.

Mr. Money: While the consultations of which the Secretary of State spoke, which one welcomes, are going on with the disablement organisations, will the hon. Gentleman and his right hon. Friend bear in mind that Lady Sharp in her report spoke of mobility in the home as being even more important than the vehicle aspect? Will he have early negotiations with local authorities on that matter?

Mr. Morris: The report deals with many of the problems of disabled people other than their problems of outdoor mobility. I have taken careful note of the point and will be having consultations on this and other matters as early as possible.

Mr. Edwin Wainwright: Will my hon. Friend take into account the situation which arises when one of a couple is left alive who is incapable of driving a car, therefore loses the driver and has no allowance from the Government? Such people are then immobile and have to stay at home for lack of Government help.

Mr. Morris: My hon. Friend is referring to the problems of the disabled passenger, the person who is too severely disabled to drive himself. The Joint Committee

on Mobility for the Disabled has been in touch with the Department on behalf of disabled passengers. This is a problem to which Lady Sharp has addressed herself in her report. It will be a very important matter in the consultations which are now proceeding.

Sir G. Howe: I know the Minister appreciates that the recommendations of Lady Sharp involve a change in principle because she suggests that cars should he available no longer specifically on the grounds of disability but by reference to the need of a disabled person as an income earner or an income contributor. I asked his right hon. Friend yesterday whether the additional cost of £3 million suggested by Lady Sharp represented the additional cost of meeting her recommendations, including the withdrawal from certain people of that which they now enjoy. Can the Minister give the House, either now or as soon as possible, an indication of the additional cost if existing facilities were continued and if the additional recommendations suggested by Lady Sharp were also to be taken up?

Mr. Morris: The question of take-up is begged by this Question. It would be hazardous for me to give any detailed figures on that subject. The figure of £3 million referred to yesterday by my right hon. Friend was that of Lady Sharp. The whole question of social criteria will of course be taken fully into account in our consultations. I do not think that I can go any further at this stage.

Kidney Transplants

Mr. Dalyell: asked the Secretary of State for Social Services whether she will introduce legislation to amend the Human Tissue Act, with a view to establishing a contracting-out system to enable hospitals to secure more kidneys and matching tissue for purposes of transplant.

Dr. Owen: Not at present, but I shall make inquiries into the desirability of such a scheme. In the meantime we intend to give some guidance to hospitals on the working of the present legislation.

Mr. Dalyell: Since the kidney donor card scheme introduced by the right hon. Member for Leeds, North-East (Sir K. Joseph) has regrettably been a disappointment, could the Government cast a


kindly eye towards legislation along the lines of the Ten-Minute Bills which try to implement Sir Hector MacLennan's committee's report?

Dr. Owen: I assure my hon. Friend that I will look at the Bill which he proposed as a Ten-Minute Bill.

Supplementary Benefit Levels

Mr. Teddy Taylor: asked the Secretary of State for Social Services if it will be her policy to increase the levels of entitlement to supplementary benefit in line with increases in the retirement pension.

Mr. O'Malley: In the present circumstances, the Government believe it is right that the main supplementary benefit scale rates should go up by the same amount as the corresponding national insurance rates.

Mr. Taylor: I thank the Minister for that reply. For the avoidance of doubt, can he assure me that a retirement pensioner on the basic pension who also receives supplementary benefit will get a net increase of £2·25, the same as normal retirement pensioners?

Mr. O'Malley: I can give the hon. Gentleman that assurance.

Mr. Douglas-Mann: One welcomes what my hon. Friend has said. Will he bear in mind that one of the ways in which a great deal of hardship can be alleviated without great expense to the Exchequer is by increasing the discretion to pay exceptional needs allowances and grants not only to those in receipt of supplementary benefit but to those living close to the supplementary benefit level? Will he consider the advice given to managers of the Department's offices so that they can exercise their discretion more freely?

Mr. O'Malley: The incoming Government and, of course, the Supplementary Benefits Commission are already reviewing a wide range of matters, including the one my hon. Friend has raised.

Regional Hospitals' Consultants and Specialists Association

Miss Fookes: asked the Secretary of State for Social Service if she will grant official recognition to the Regional

Hospitals' Consultants and Specialists Association.

Mrs. Castle: No, Sir.

Miss Fookes: Why not?

Mrs. Castle: Because there are already arrangements for representing consultants and specialists in negotiations with the Health Departments. I cannot be expected to negotiate with two bodies rather than one.

Mr. Fry: Is the right hon. Lady aware that consultants in this country are already earning only about one-half or one-third as much as those holding similar positions in Europe? If she does not take note of their position and forces them to give up private practice, the drain of these experienced medical people will be a very serious problem indeed.

Mrs. Castle: The BMA has already made it clear to me that there is profound dissatisfaction among consultants. That is why I told the House during my speech in the debate on the Address that we are setting up a joint working party to examine the consultant's contract. We met the BMA's request, and it is delighted. It is also delighted that the Under-Secretary of State will be chairing that working party.

Mrs. Renée Short: Will my right hon. Friend bear in mind that if she ended the pernicious and invidious system of merit and distinction awards which are paid to only a minority of consultants, there would be more money for all consultants?

Mrs. Castle: I am sure that that would be one of the matters that the joint working party would want to look at.

Psychiatric In-patients

Mr. Christopher Price: asked the Secretary of State for Social Services how many fit psychiatric in-patients she estimates are at present being kept in hospital because of the shortage of hostel and other sheltered accommodation; and what steps are being taken to overcome this shortage.

Dr. Owen: About 22,000 of the 54,000 patients presently in mental handicap hospitals might more easily be accommodated in the community given the necessary facilities. Comparable estimates are


not available in respect of the mentally ill. We are determined to overcome the shortage of facilities—as indeed are in general local authorities—but it will take time and progress will depend on the resources that we can make available.

Mr. Price: Is my hon. Friend aware that the problem of the adolescent is particularly difficult and that perfectly fit youngsters sometimes attend school in the daytime and are sent back to locked adult wards in mental hospitals in the evening because there is nowhere else for them to go? Will he institute a full inquiry, because some of us regard the figures that he has given as suspect? We consider the problem to be a great deal bigger than those figures suggest.

Dr. Owen: The problem of adolescents is causing me great concern and I will look into this. I want to make it clear that the statistics I have given are only estimates; they come from Cmnd 4683, "Better Services for the Mentally Handicapped". We need more up-to-date information.

Mrs. Knight: Will the hon. Gentleman inject a little urgency into this matter? There is certainly a need for urgency. Is he aware that in the Birmingham area a constituent of mine who has a sister who suffers from schizophrenia looked for many months for suitable hostel accommodation for her but has been quite unable to accommodate her in the city?

Dr. Owen: I shall certainly look into the case which the hon. Lady has mentioned if she will write to me. I have been deeply interested in this matter ever since I was a medical student.

Sir D. Walker-Smith: Will the hon. Gentleman be issuing guidance to the new regional and area health authorities regarding the priorities to he given to the provision of day places for psychiatric treatment?

Dr. Owen: In the capital allocation programme which we have just authorised we have already indicated the priorities to which we attach great importance, and the mentally ill and the mentally handicapped are very high on that list.

Adoption and Guardianship of Children

Mr. Whitehead: asked the Secretary of State for Social Services what plans she has for implementing the proposals of the Houghton Report on adoption and fostering.

Mrs. Castle: I would refer my hon. Friend to the undertaking in the Gracious Speech that comprehensive proposals will be brought forward to reform the law relating to the adoption, guardianship and fostering of children on the basis of the recommendations of the Departmental Committee on the Adoption of Children.

Mr. Whitehead: I thank my right hon. Friend most warmly for that reply. Those of us who joined her hon. Friend the Under-Secretary in sponsoring the Children Bill hope that this measure will be introduced this Session. This Parliament especially lends itself to measures of this kind, which have wide all-party support.

Mrs. Castle: It is certainly my desire and, of course, that of my hon. Friend the Under-Secretary that we should bring legislation before the House as soon as possible. The great work which my hon. Friend did through his Private Member's Bill will form the basis on which we can build the consultations leading to comprehensive Government proposals.

Mr. Raison: While sharing the belief that this legislation is necessary, may press the right hon. Lady a little further as to timing? Will she also confirm that the legislation will be coming primarily from her Department rather than from the Home Office?

Mrs. Castle: The answer to the second half of the question is certainly "Yes". With regard to time, I can only say that there must clearly be further consultations. This will be a Government measure, not a Private Member's measure. Therefore, as a Department we shall need to consult on some of the details of what will be very comprehensive legislation. I am aware, as we are all aware, of how anxious the whole House is to have this legislation advanced as quickly as possible.

Good Hope Hospital, Sutton Coldfield

Mr. Norman Fowler: asked the Secretary of State for Social Services what representations she has received about the need for extension to Good Hope Hospital, Sutton Coldfield; and whether she will make a statement.

Dr. Owen: None, Sir; but my predecessor received representations from several hon. Members and various local interests. Phase III of the development at Sutton Coldfield attracts high priority and the West Midlands Regional Health Authority intends to seek new tenders as soon as circumstances in the construction industry permit.

Mr. Fowler: I thank the hon. Gentleman for that reply. Does he realise, however, that the Good Hope Hospital serves a population of 330,000 but has only 360 beds for acute cases? This is placing the staff under enormous strain. Is there not a case for very urgent action?

Dr. Owen: We attach great importance to the proposed scheme for extension. I give the hon. Gentleman that assurance.

Mr. Ronald Atkins: While considering the needs of Sutton Coldfield, will my hon. Friend accept the urgent need for an immediate start to be made on the new hospital for Preston, after so many years of dilly-dallying?

Dr. Owen: This project causes concern in many parts of the House. If my hon. Friend would care to write to me or to come and see me about it, I should be happy to discuss the problem.

Miners' Strike (Benefit)

Mr. Bruce-Gardyne: asked the Secretary of State for Social Services what was the aggregate cost to public funds of supplementary benefit paid to those involved in the miners' strike, and to their dependants, and of payments made after return to work and not so far recovered.

Mr. Dixon: asked the Secretary of State for Social Services how much was paid in supplementary benefits to miners' families in the recent strike.

Mr. O'Malley: During the strike £44,000 and £4·1 million respectively

were paid; fully recoverable post-dispute payments amounted to £123,000 by 19th March.

Mr. Bruce-Gardyne: What is the sense or the fairness of obliging taxpayers to subsidise strikers who cause them grave inconvenience or loss when vast union funds are apparently reserved to pay for a £250 night out for Mr. Gormley and his friends or a Rolls-Royce for Mr. McGarvey? Will the hon. Gentleman now take steps to ensure that the unions are obliged to finance their members if they strike, even if it means that Mr. Gormley and Mr. McGarvey have to eat and travel like the rest of us?

Mr. O'Malley: The hon. Gentleman is apparently not yet aware that his party lost the General Election. The present Government have no intention of further poisoning industrial relations, as the previous administration did with the Industrial Relations Act. Furthermore, the mine workers and other sections of the community who may be involved in industrial disputes are also taxpayers, and we have a responsibility to see that their families are not brought into the poisonous atmosphere which the previous Government created in industry.

Mr. Skinner: Will 1st July be less than a million light years away? That is in relation to Question No. 5.
On this very vexed question, does my hon. Friend agree that it takes two sides to cause a strike? In this case it seemingly took only one—the members of the previous administration. As they were responsible for causing the strike, would it not be appropriate for them to recompense the taxpayers by allowing them to make a retrospective claim on their wages during the period in which they were causing the strike?

Mr. O'Malley: My hon. Friend is quite right that it was as a result of the inflexible policies of the previous Government and the arrogance of the previous Prime Minister that the strike took place at all. If anyone has a responsibility for the expenditure of over £4 million of public money, about which the hon. Member for South Angus (Mr. Bruce-Gardyne) and his hon. Friends complain, it is the previous administration.

Mr. Dixon: Does the hon. Gentleman approve of the system of politics in Denmark, with its long tradition of social democracy, under which the first call in such a situation is not on the taxpayers' funds but on the union's funds?

Mr. O'Malley: If the hon. Gentleman looked at the figures he would find that during strikes called last year a number of unions made strike benefit payments to their members. One thing that the hon. Gentleman should bear in mind, however, is that it was the Social Security Act 1971, of the previous administration, which acted as a positive measure to stop unions paying that kind of benefit.

Mr. Kinnock: Will my hon. Friend reject the barbarity which inspired the question from the hon. Member for South Angus (Mr. Bruce-Gardyne) and those of his hon. Friends? Has any calculation been made of the average time that a strike would last in the event of payments being removed from the wives and dependants of striking miners or anyone else?

Mr. O'Malley: No such calculations have been made, nor do they need to be made while the present Government remain in power because we have no intention of using the wives and families of strikers as a weapon against those strikers.

Sir G. Howe: Does the hon. Gentleman appreciate that neither side of the House is anxious to cast hardship on the wives and dependants of strikers by any change in this matter? Does he also realise that the whole country is and will remain concerned about the extent to which public funds can be seen to encourage the prolongation of industrial action? The whole country is and will remain increasingly concerned about the extent to which we are afraid that the present Government's policies will lead to acceleration of inflation, not least in the public sector.

Mr. O'Malley: I certainly do not accept the first part of that question. As for the second part, it comes ill from the Conservative Party to talk about the Government creating inflation when we look at the results of the previous administration.

Mr. Bruce-Gardyne: On a point of order. Mr. Speaker. I beg to give notice

that in view of the unsatisfactory nature of the reply I shall seek to raise the matter at the earliest possible moment.

Nurses' Pay

Mr. William Hamilton: asked the Secretary of State for Social Services if she will take steps to ensure that the pay and conditions of nurses within the National Health Service are soon improved.

Dr. Owen: Improvements to nurses' pay and certain conditions of service are included in a general settlement which has recently been negotiated and agreed by the Nurses and Midwives Whitley Council and which will come into operation from 1st April. We are aware of the concern of the nursing organisations over their claim for a general revaluation of salary scales and my right hon. Friend hopes to meet representatives of the staff side shortly for a general discussion on their problems.

Mr. Hamilton: Does my hon. Friend realise that many nurses regard the Whitley Council machinery as grossly unsatisfactory and unrepresentative of their views? Will he follow up the suggestion made by the President of the Royal College of Nursing only yesterday that there should be an independent inquiry into the pay and career structure of the nursing service, and that such an inquiry should report within a time scale comparable to that applicable to the inquiry into the mining industry?

Dr. Owen: These are the sort of issues which will not doubt be raised by the nurses when they meet my right hon. Friend in the discussions which I have stated are to take place.

Mrs. Kellett-Bowman: Does not the hon. Gentleman regret that the Government are preventing the nurses from going to the Relativities Board, which would have given them a square deal?

Dr. Owen: That comes very hard from the hon. Lady. It was her Government which arranged the present negotiated settlement and increased the meals charges—increases which are due to take effect on 1st April.

Mr. Ashton: Does my hon. Friend realise that, now that supplementary benefits are to be increased, many people will be going to work for less than they


could get by staying off work? Is there any intention to introduce a national minimum wage or any other measure for lower-paid workers?

Dr. Owen: We are aware that there are many people who give dedicated service inside the National Health Service and whose wages are not as high as many of us would wish. This is one of the issues which will no doubt be raised when my right hon. Friend meets the staff side.

Family Planning

Mrs. Renée Short: asked the Secretary of State for Social Services what proposals she has to introduce a free family planning service.

Mrs. Castle: I hope to make an announcement very shortly.

Mrs. Short: Will my right hon. Friend bear in mind that we await that announcement with great eagerness, especially as it was part of the policy on which we fought the last election?

Mrs. Castle: My hon. Friend is quite right; this was part of the policy on which we fought the last election, and I hope that I shall not have to keep her waiting too long.

Sir S. McAdden: In the interests of greater accuracy, would it not be better to call this a free contraception service rather than a family planning service, as it has only a remote connection with the planning of a family?

Mrs. Castle: I am sorry, but I could not for one moment accept what the hon. Gentleman said.

Dr. Winstanley: If the right hon. Lady cannot introduce a fully comprehensive family planning service on 1st April as many of us hope, will she at least consider authorising general practitioners to prescribe the contraceptive pill on form EC10 in cases in which there is no medical need for the prevention of contraception?

Mrs. Castle: I ask the hon. Gentleman to await the full statement that I intend to make as soon as possible.

Mr. Raison: Does the right hon. Lady accept that there are many people who

feel that there are higher priorities for expenditure than this—for instance, on community care for the mentally sick and handicapped?

Mrs. Castle: That comment certainly surprises me, as I thought that it was my predecessor who was supposed to be introducing a comprehensive family planning service.

P70 Invalid Tricycle

Mr. Woodhouse: asked the Secretary of State for Social Services if she will publish the Motor Industry Research Association's report on the P70 invalid tricycle in conjunction with Baroness Sharp's report on mobility for the disabled.

Mr. Alfred Morris: I would refer the hon. Member to the statement made by my right hon. Friend yesterday.—[Vol. 871, c. 30–32.]
Mr. Woodhouse: May I congratulate the hon. Gentleman on his decision that this report should be published and ask him whether he is aware that until the date of publication very great anxiety had been felt by many disabled drivers about the possible contents of the report? Their anxieties will hardly be allayed by the report of the test of 17th August of last year relating to impact and fire risks of the P70 model or by the publication of the very abbreviated report on the effect of side wind.

Mr. Morris: I am deeply aware of the anxieties to which the hon. Gentleman refers. These will be taken fully into account in the course of our consultation on Lady Sharp's report.
I welcome this opportunity to inform the House of a statement made by the director of MIRA, Mr. R. H. Macmillan, to my right hon. Friend. Mr. Macmillan said:
I confirm that I am agreeable to the publication of the three parts of the report which concern the impact tests. As regards the fourth section, which concerns the cross wind effects, I cannot agree to publication because to do so would breach confidence, as other makes of vehicles were involved in the tests
Mr. Macmillan then suggested a synopsis which my right hon. Friend announced to the House yesterday.

Industrial Injuries Benefit (Overseas Accidents)

Mr. Robert Edwards: asked the Secretary of State for Social Services if, in view of the country's need for export contracts, she will introduce legislation to amend Section 5(4) of the National Insurance (Industrial Injuries) Act 1965 to admit to benefits workers who are injured when working abroad who in other respects satisfy the conditions for benefit.

Mr. O'Malley: A general extension of the industrial injuries scheme to cover overseas accidents has been carefully considered on a number of occasions, but the conclusion has always been that such extension would be impracticable mainly because of the difficulty in establishing whether the conditions governing title to benefit were satisfied. There are, however, reciprocal agreements with 20 countries whereby industrial accidents occurring in those countries to employees who are there temporarily in the service of a British employer are covered by our scheme and we shall continue the policy of extending cover in this way wherever possible.

Mr. Edwards: Is my hon. Friend aware that there are many countries in which grave social injustice arises where workers are injured and where there are no joint arrangements and the employer has taken out no insurance? Will my hon. Friend at least urge employers to take out insurance in these exceptional circumstances?

Mr. O'Malley: Yes, I would be pleased to do so.

Oral Answers to Questions — INDUSTRY AND ENERGY DEPARTMENTS

Mr. Rost: asked the Prime Minister whether he is satisfied with the co-ordination between his Ministers responsible for the Industry and Energy Departments.

The Prime Minister (Mr. Harold Wilson): Yes, Sir.

Mr. Rost: Does the Prime Minister agree that if our energy supplies were produced and consumed less wastefully in this country there would be no energy shortage, the balance of payments would be a lot healthier and the standard of living of our people would be substan-

tially higher? Does he agree that the new Energy Department's priority should be, in addition to producing self-sufficiency in this country, to give priority to conservation and a more efficient conversion and consumption of our energy resources? Will the right hon. Gentleman ensure cooperation between Government Departments to see that this policy is pursued?

The Prime Minister: Yes, I very much agree with the analysis set out in the first part of the Ion. Gentleman's question. I think it is an important factor and it is one which my right hon. Friend the Secretary of State for Energy is making a priority, but he has many other important decisions to take if we are to achieve the hon. Gentleman's hope of self-sufficiency.

Mr. Tom King: Will the Prime Minister, in considering the question of coordinating the activities of Ministers in the Department of Industry, investigate the strange activity of one Under-Secretary who appears not to be co-ordinated with the Department of the Environment and who made a totally erroneous statement about the Government's future action on rates which had a considerable impact in the West Country?

The Prime Minister: The hon. Gentleman is still living in yesterday and not today. However, it does not arise out of this Question.

Mr. Grimond: Is the Prime Minister aware that it is not only with the Department of Industry that energy will be very much involved? Will he consider adopting the suggestion made by his party when in opposition that a White Paper might be published explaining the responsibility of the Department of Energy and its relationship to other Ministries?

The Prime Minister: I think it is well understood, but I will certainly carefully consider the right hon. Gentleman's suggestion. If anything more needs to be said, I will see that it is said.

Oral Answers to Questions — MINISTERIAL BROADCAST

Dr. Edmund Marshall: asked the Prime Minister when he next plans to make a ministerial broadcast.

The Prime Minister: I would refer my hon. Friend to the reply which I gave on 19th March to my hon. Friend the


Member for Bolsover (Mr. Skinner).—[Vol. 870, c. 75.]

Dr. Marshall: When my right hon. Friend next appears on television, will he bear in mind that some of the retirement pensioners watching him get their television licences for 5p while the others have to pay the full licence fee? Will he therefore consult my right hon. Friends the Secretaries of State for the Home Department and for Social Services with a view to removing this unjust discrimination?

The Prime Minister: This was a question which greatly engaged the House in the last Parliament and got very far in a Bill in Committee upstairs. It will certainly be a matter which will engage the attention of right hon. and hon. Members in all parts of the House in this Parliament.

Mrs. Winifred Ewing: I am disappointed to hear that the Prime Minister will not be making a broadcast soon and I thank him profusely for the five minutes he awarded my party in 1964. [HON. MEMBERS: "Too long."] I express our disappointment at the failure of the Conservative administration to grant us more time in later circumstances. When can the Scottish National Party expect to make any kind of broadcast, ministerial or otherwise?

The Prime Minister: I was not responsible in any way for the granting of five minutes in 1964. The answer to the last part of the question is if and when its members ever become Ministers.

Mr. Adley: If the Prime Minister makes a broadcast, will he explain to the nation how it helps the needy to subsidise the cost of Harry Hyams' bread?

The Prime Minister: I do not think that arises out of the Question. The hon. Member may find the answer in his little red book.

Mr. Whitehead: If I may turn my right hon. Friend's mind from one form of Conservative Kung-Fu to another, may I ask, if he is undertaking a review with the broadcasting authorities of party political broadcasts and ministerial statements, whether he will examine, for example, the party political broadcast by

the right hon. Member for Altrincham and Sale (Mr. Barber) during the election campaign in terms of standards and objectivity which should be followed out in British politics?

The Prime Minister: There is no ministerial responsibility for the broadcast by the right hon. Member for Altrincham and Sale (Mr. Barber). The arrangements for party political broadcasts, whether during a General Election or in intervening periods, are regulated by a committee of the parties and the broadcasting authorities.

Oral Answers to Questions — CBI AND TUC (MEETINGS)

Mr. Duffy: asked the Prime Minister when he next intends to have talks with the TUC and CBI about prices and incomes policy.

Mr. Molloy: asked the Prime Minister when he next expects to meet the TUC and CBI.

The Prime Minister: I shall be meeting the TUC tomorrow and the CBI on Thursday, Sir.

Mr. Duffy: Will my right hon. Friend remind the TUC leaders tomorrow that the Government are fulfilling their election pledges with unprecedented speed and are thus delivering their half of the social contract? Will he make clear that he will now be looking to the TUC leaders for an appropriate response?

The Prime Minister: I think that the TUC as well as anyone else in the country will have recognised the facts stated by my hon. Friend.

Mr. Tapsell: Has the Prime Minister yet had time to form a judgment about the amount by which, first, prices and, secondly, incomes will rise in the current year?

The Prime Minister: I do not think that I should anticipate any matters on this question which may arise in the course of my right hon. Friend's Budget speech.

Mr. Molloy: Is my right hon. Friend aware that sane and sensible industrial relations are vital to the future of our nation? Stupid industrial relations as brought about by the former Prime


Minister and his right hon. Friends soured British industrial relations to an extent never before experienced. Will my right hon. Friend therefore agree that there should be constant liaison and constant discussion with the CBI and the TUC to maintain the excellent start with which the Government have proceeded with both sides of industry?

The Prime Minister: I do not think it is a criticism of the right hon. Member for Sidcup (Mr. Heath) when he was Prime Minister that he failed to spend a great deal of time with the CBI and the TUC. He saw both when trying to work out a voluntary policy and subsequently. But it must be the duty of any Government of this country at this time to try to get a more united and consensus approach to industrial matters.

Mr. Cormack: Does the Prime Minister intend to proceed to the repeal of the Counter-Inflation Act after or before repealing the Industrial Relations Act?

The Prime Minister: I have nothing to add to what my right hon. Friend the Secretary of State for Employment said on these matters last Monday.

Oral Answers to Questions — NEW ZEALAND

Mr. Dalyell: asked the Prime Minister if he will seek to make an official visit to New Zealand.

The Prime Minister: I would like to visit New Zealand if a suitable opportunity occurs, but I have no immediate plans to do so.

Mr. Dalyell: Has there been any opportunity yet to talk to the New Zealand Government about the scheduled French nuclear tests in the Pacific?

The Prime Minister: This subject was raised by Mr. Walding, the New Zealand Minister who visited this country last week, in his meeting with my right hon. Friend the Foreign Secretary. Our position on this matter is as it has always been. Her Majesty's Government are totally opposed to testing in the atmosphere.

Mr. Teddy Taylor: A visit to New Zealand or any other friendly country does not imply acceptance of or agreement with all that country's policies. Will the Prime Minister review his policy

on visits bearing in mind that the foolish cancellation of a good will visit to Greece has resulted in the loss of £60 million of work for Clydeside and has put many jobs at risk?

The Prime Minister: I do not agree with the hon. Gentleman in anything he has said, but perhaps I may point out to him that there are many thousands of miles difference between New Zealand and Greece and I shall be happy to send him a map of the globe if he wishes.

Oral Answers to Questions — HUYTON

Mr. Ashley: asked the Prime Minister if he will pay an official visit to Huyton.

The Prime Minister: I was in Huyton last weekend and expect to make many visits in the future as Prime Minister.

Mr. Ashley: When my right hon. Friend was in Huyton last month, he was there as a successful parliamentary candidate. When he goes there next month, it will be as a highly successful Prime Minister. Will he assure the people of Huyton and hon. Members that, notwithstanding the huffing of the Conservatives or the puffing of the Liberals—the Tweedledums and Tweedledees of politics —he will ensure implementation of the main priorities of the Labour Party manifesto in this Parliament with particular reference to the disadvantaged both at home and abroad?

The Prime Minister: I thank my hon. Friend for his remarks. I have visited Huyton twice since the General Election and I shall be there again this weekend. On the last part of the question about the disadvantaged, my hon. Friend will have noticed steps already taken by the Government in regard to disabled and handicapped persons and I think that he will soon hear an announcement on the question of disadvantaged persons abroad.

Mrs. Kellett-Bowman: Does the Prime Minister realise that he is going to Huyton as Prime Minister largely because of the political activities of Mr. Campbell Adamson? Since he has declared his intention of giving no political honours, may we take it that he will not be rewarding Mr. Campbell Adamson for his assistance to the Labour Party during the General Election?

The Prime Minister: I think that the House would feel advantaged if the hon. Member could recover her composure of the previous Parliament, but in her present excitable state I can assure her that I am not going to Huyton as its Member as a result of Mr. Campbell Adamson's activities. He did not get 15,000 votes in a truncated constituency. In spite of the high regard in which Mr. Adamson is held in all quarters of the House, I doubt whether many of my constituents have heard of him. The hon. Lady will have to think up another supplementary question.

Oral Answers to Questions — PRESIDENT POMPIDOU

Mr. Skinner: asked the Prime Minister whether he has any plans to meet President Pompidou.

The Prime Minister: I have no plans to do so at present.

Mr. Skinner: Will my right hon. Friend give an assurance that when he or any of his ministerial colleagues meets President Pompidou or any of the President's friends in the near future, they will issue a reminder that a few concessions about such things as pig injections are no substitute for a complete renegotiation of the treaty and a referendum of the British people?

The Prime Minister: It is not necessary to visit President Pompidou for one

to be able to recollect the statement by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, in the debate last Tuesday, on the intention of the Government fundamentally to renegotiate and to have a referendum by the British people. This has always been said.

Oral Answers to Questions — BRUSSELS

Mr. McCrindle: asked the Prime Minister what plans he has to visit Brussels.

The Prime Minister: I would refer the hon. Member to the reply which I gave on 21st March to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley).—[Vol. 870, c. 151.]

Mr. McCrindle: Bearing in mind the Prime Minister's reply to the previous Question, may I ask whether, if he goes to Brussels, he will make it clear that his personal opinion is not likely to have changed since 1967 and that it is renegotiation which the Government seek and not withdrawal, except as a last resort?

The Prime Minister: In 1967, and at all times since, I have said that the question of entry depended on the terms. We rejected the terms. My right hon. Friend is now concerned with renegotiation of the terms, and then the country will decide.

WAYS AND MEANS

BUDGET STATEMENT

Mr. Speaker: Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in the past six years, copies of the Budget Resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

INTRODUCTION

3.31 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey): I rise to present my first Budget in a mood of humility and trepidation which I think the House will find appropriate for a maiden speech—a mood which I fear may not have characterised all my contributions to our debates in the past.
After only three weeks in the Treasury, I well understand why the right hon. Member for Altrincham and Sale (Mr. Barber) has felt that three years is enough. May I say how much I regret that we are not continuing our partnership in these new circumstances? However much I may have differed from him on economic matters—and perhaps even more on politics—like all the House, I have always appreciated his charm and friendliness as a human being and the nimble dexterity he brought to our proceedings.
I look forward to my new partner, the right hon. Member for Carshalton (Mr. Carr), who is taking over in circumstances very like those in which I assumed the same responsibilities two years ago—at the outset of a Budget. He is going in at the deep end. I wish him a long and happy career as Shadow Chancellor.
I hope that the House will forgive me if I do not achieve the same elegance in presenting my first Budget as characterised the Budget Speeches of my predecessors. In normal circumstances, the preparation of a Budget is likely to require up to six months' hard work, not only by the Chancellor of the Exchequer, but by the Government as a whole. But these are in no sense normal circumstances.
The Government have been in office for barely three weeks. In those three weeks, I have had to translate the policy on which we fought the General Election into firm decisions on public expenditure, on taxation, on the balance of payments and on inflation. Some of the things we wish to do require complex administrative and legislative preparations which it is impossible to carry through in so short a time.
Even so, it has been the most exhausting three weeks of my life, and I know that my advisers in the Treasury and the two Revenue Departments have had to work even harder than myself. I should like at the outset to pay my tribute to the quite unparalleled energy, experience and dedication of those public servants, from the Permanent Secretary to the shorthand typist, without which the preparation of a Budget in so short a time would have been inconceivable.

THE ECONOMIC BACKGROUND

I open, as is usual, with a short review of the British economy in 1973—a review which has more than usual relevance, since it must describe the legacy that I inherited from the previous Government three weeks ago. The picture is a sombre one—it reflects what even before the onset of the three-day week was generally regarded as the gravest situation Britain has faced since the war.

By the end of last year, before the increase in oil prices had exerted more than a very minor impact and before the recent industrial disruption, nearly all the major indicators of the British economy were flashing warning lights. Output, which had expanded vigorously in the early months of 1973, was slowing to a halt through shortages of capacity. The balance of trade was deteriorating faster and faster. The balance of payments on current account registered a deficit of £1,470 million on the year as a whole.

After three disappointing years, manufacturing investment was only just beginning to gain momentum by the end of 1973. Despite the complex machinery of wage and price control, inflation last year was worse than in 1972. At the end of the year, the retail price index showed an increase of 10·6 per cent. over a year earlier when the corresponding figure for December 1972 was 7·7 per cent. The


rate of inflation is still increasing—last week's figure shows that over the year ending in mid-February the retail price index rose 13·2 per cent.

On the brighter side, unemployment in the United Kingdom as a whole fell during the year from over 750,000 to half a million in December and during the same period unfilled vacancies rose. But by the third and fourth quarters there were shortages of skilled labour in some industries, especially construction. Shortages of materials and finished goods were drawing in extra imports.

Many hon. Members on this side of the House, as well as on the benches opposite, had been prepared to run substantial risks on the balance of payments and inflation for the sake of forcing Britain on to the path of higher growth. The tragedy is that the gamble failed. The last Government's dash for growth, like so many in the past, produced an impressive spurt for a few months while taking up the slack caused by the mass unemployment of 1971–72. But there is no evidence that the underlying growth rate of the economy as a whole has improved.

By the end of the year, as the oil crisis broke, the problems were piling up on every side. As the House knows, my predecessor took action in December both on the money supply and on public expenditure. Since his measures form part of the base on which I must construct my Budget, I now deal with the monetary problem at greater length.

The year 1973 saw a rapid growth in money and credit, accompanied by high nominal rates of interest. Unrestrained bidding by the banks for funds in the money markets almost certainly accelerated monetary growth. Rates offered for deposits rose more than the cost of bank credit, thus giving an incentive to the banks' big customers to arbitrage by borrowing on overdraft and on-lending in the money markets. The previous Government's earlier decision to allow tax-free interest on personal loans must have aggravated this trend.

As a result of these factors, money supply, broadly defined, rose by 27 per cent. in the past year. The public sector borrowing requirement of over £4 billion was a powerful contributory force in

this monetary expansion. An even greater stimulus to the growth in money supply came from the private sector's demand for bank credit, amounting to nearly £6 billion.

The failure of the techniques of competition and credit control to stem this tide of monetary expansion led the Bank of England to introduce a new scheme in December to supplement the existing arrangements for controlling the growth of money and credit. The effect of the scheme will be greatly to increase the marginal cost of funds to the banks should they significantly exceed the 8 per cent. guideline for the growth of their interest-bearing liabilities. They cannot pass on this cost by increasing the general level of their lending rates, and this should deter them from excessive bidding for funds in the money markets. It may, therefore, produce more stable short-term interest rates. I shall watch carefully to see whether this new scheme proves to be effective in practice.

These new proposals signalled the collapse of the policies by which the previous Government had hoped to deal with the monetary situation. On 17th December, my predecessor used the prospect of a shortage of energy in 1974 to justify cuts in public expenditure and the imposition of hire-purchase restrictions. What I still find impossible to understand is why at the moment when the then Chancellor took these measures on the grounds that, to quote his words, this country faced its gravest economic situation since the war, he should once again have renounced an opportunity for creating that national unity which is a precondition for tackling the situation he so graphically described.

Even more baffling is the then Prime Minister's decision to lead his colleagues into an unnecessary confrontation with the National Union of Mineworkers, which was bound to produce widespread industrial disruption and lead to a series of catastrophies for the economy as a whole.

It is still too early to assess the full effects of the three-day week and still more to predict how fast the nation will recover from its consequences. In some respects the economy has weathered the three-day week better than many feared, partly, perhaps, because in many cases


employers and workers joined forces to reduce or even to avoid the impact of the Government's restrictions. Indeed, the energetic and whole-hearted co-operation between trade unions and management that we have seen throughout the country in the past three months gives the lie direct to the widespread myth that industrial relations are exceptionally bad in Britain.

But, despite all the efforts of both sides of British industry to ease the suffering inflicted on them, the consequences were grave enough. Personal income has fallen, though guaranteed minimum earnings arrangements, social security benefits and tax refunds may have reduced the aggregate loss of personal income to under 5 per cent.

Output as a whole fell much more, perhaps as much as 10 per cent. Nearly all the loss was of industrial output, which may have fallen by over 20 per cent. The consequent fall in profit income was cushioned by running down liquidity and—even more—by reducing stocks. I fear that the three-day week may have delivered a heavy, but I hope a temporary, blow to the investment intentions of many companies. Moreover, there has been a further deterioration in the trading position of the nationalised industries which requires the immediate action that I shall describe later in my speech.

The trade figures which have just been published show that in the two months of January and February our trade deficit amounted to some £800 million. There is no doubt that extra imports to take the place of goods not available in Britain helped to produce this deficit. The effects of the three-day week will continue to damage our trade figures for some time to come.

The election came just in time to save us from a worse disaster. But the stark fact is that already the nation has probably lost something between £1,500 million and £1,750 million worth of output as a result of the three-day week, and well over that since the ban on overtime began. This is a very heavy handicap to have to carry at a time when we face so many other problems. I dare say that hon. Members on both sides of the House may wonder whether it was worth it.

But that is water over the dam. The miners are now back to work and the whole of the economy is moving forward once again. Though the effects of the three-day week will be felt for some months yet, I hope and believe that both sides of industry are determined to expand production rapidly so as to make good the shortages that have arisen and to enable manufacturers to rebuild their stocks.

With hard work, it should be possible by the middle of the year to get output running at something like the level it would have reached without the three-day week. After that, we shall still be working to complete the replacement of stocks lost in the past months. This is bound to have unwelcome consequences for the balance of payments.

Perhaps I can best conclude this brief summary of events over the past year by quoting the words of the National Institute's Economic Review for February on the prospect for the coming year, words which were written before the last General Election was held:
It is not often that a Government finds itself confronted with the possibility of a simultaneous failure to achieve all four main policy objectives—of adequate economic growth, full employment, a satisfactory balance of payments, and reasonably stable prices.

Yet this was my inheritance when I entered the Treasury just three weeks ago today. I do not believe that any hon. Member would claim that it was a happy one.

THE ECONOMIC OUTLOOK

Let me now deal with the prospects for the year ahead, as they must help to form my Budget judgment. The House must recognise that, whatever steps I take today, the country will be wrestling for many months with the effects of past policies. There is still a great deal in the pipeline which has yet to exert its effect on the economy.

First, output. As I have said, there are inevitably great uncertainties about the speed with which the economy can recover from the consequences of the three-day week. I doubt whether in this year as a whole the nation will be able to produce more than it did in 1973. Too much ground has already been lost during the three-day week for that. But


we should see a steady growth in output over the next nine months, and I have little doubt that in the second half of the year output will be above the level it was running at before the recent crisis.

The outlook for prices is less encouraging. Part of last year's dizzy rise in the price of oil and other basic commodities has still to be felt in the shops, so it is inevitable that the rate of increase of the retail prices index will continue to be substantial for a while yet. I shall refer in a moment to action which the Government will take to deal with the price increases which hit the family budget hardest.

In order to persuade the wage-earner that he had some protection against inflation, the last Government established threshold agreements as an integral part of their Pay Code in stage 3. But they do not protect the country from inflation. Indeed, the threshold itself will tend to increase prices as employers pass on at least some of the higher wages it requires them to pay.

At a time when world prices are rising, the threshold itself boosts inflation. As I shall show later, it sets limits to the extent to which a Chancellor can use indirect taxation as a means of raising revenue. It is as if I have been sent into the arena to fight the monstrous problems now confronting me with one hand tied behind my back.

Faced with the prospects of inflation on their present scale, we cannot afford to leave aside any measure which the Government can take to help the housewife where it matters most. Strengthening the present system of price controls will make a useful and essential contribution. But it would be wrong to expect too much from the operation of price controls alone, even with the improvements we are making.

Further action is therefore required, particularly to hold down the increase in the price of essential foods—the most important single item in the family budget and the one which has risen most in recent years. I will outline in a moment the action we are proposing on food subsidies. The House has already welcomed the action my right hon. Friend the Minister for Agriculture and Fisheries took at the weekend to prevent decisions in the European Community from putting

up food prices in our shops this spring and summer.

A policy for ensuring the orderly growth of incomes is no less necessary for combating inflation. My right hon. Friend the Secretary of State for Employment has already outlined our attitude towards pay and other forms of incomes. But price controls and subsidies, even in alliance with the most perfect incomes policy which could be devised, cannot go far towards winning the battle against inflation if fiscal and monetary policy are pulling in the opposite direction. That is perhaps one of the lessons of our experience over the past few years. My job as Chancellor is to provide the framework of fiscal and monetary policy within which price controls and incomes policy can operate most effectively.

The appropriate fiscal measures are of course the main substance of my Budget. But I will say a word here on the monetary outlook. I hope that the new monetary technique adopted last December will enable us to keep the growth in money supply at a much lower rate in the next 12 months.

The present level of interest rates, I know, imposes a heavy burden on some businesses and individuals, particularly on those millions of people who desperately want a house but cannot afford a mortgage, and, indeed, on those with mortgages who have bought their homes at the recently inflated prices. Our aim will be to bring about a reduction in interest rates from their present high level as soon as this is feasible. There is no short cut available here. It will depend above all on our success in reducing inflationary expectations, since without question they are a major cause of high nominal interest rates. It will depend on our ability to restrict the public sector borrowing requirement here at home, and it will also require international co-operation to bring down interest rates world-wide.

In the period immediately following the three-day week, some firms will undoubtedly require credit to tide them over temporary liquidity difficulties. We shall watch the situation closely and adjust our policy flexibly to ensure that the banks have sufficient resources to meet these needs.

I now turn to the balance of payments, dealing first with the problems caused for


the United Kingdom and all the other oil importing countries by the recent increase in oil prices. The House will know that the oil-producing countries are likely in 1974 to have among them a current account surplus with the rest of the world of perhaps $60 billion or $70 billion.

The impact of the price increases on the United Kingdom can be seen from the fact that our crude oil imports cost £275 million in February compared with only £100 million last September. The last round of price increases has still to work its way right through. In total, price increases will produce an addition of more than £2,000 million to the import bill for oil this year. The financing of deficits of this kind will be a formidable challenge to the international community with which I shall deal later.

We in Britain have to consider not only an oil deficit, but a serious underlying deficit. The scale of the problem is well illustrated by the trade figures for February, which have been announced this afternoon. The deficit on visible trade is £429 million, some £50 million higher than the revised figure for January. This unprecedented deficit has been caused in part by the three-day week. Imports in value terms have gone up to £1,579 million and this figure reflects increased imports of semi-manufactured goods as well as oil price increases.

But the picture is not wholly discouraging. In spite of the three-day week, exports have also risen sharply to some £1,150 million. This figure confounds the general and quite reasonable expectation that exports would be severely affected in February by three-day working. It shows the determination of everyone in British industry to keep exports going and orders alive in spite of the formidable problems that were faced in the early weeks of this year. It will help to convince overseas customers that this country has the ability and the will to maintain and develop its overseas markets.

Nevertheless, as with the oil deficit, we cannot hope to eliminate the whole of the underlying deficit this year; nor would it be right to try to do so. We may find that we are helped by a flattening—or even a decline—in other commodity prices later in the year. This would be a bonus, but, especially after

last year's experience, we must not count on it. Meanwhile, what is necessary is that the deficits should be covered by capital inflows of one kind or another, either by the direct monetary inflows, to which the United Kingdom is well accustomed, or by borrowing in foreign currencies.

I have decided that we need to make it clear to the world that we can finance the deficit that lies ahead. Accordingly the Bank of England has, with my authority, been in consultation with the clearing banks about the possibility of a longterm loan of foreign currency for Her Majesty's Government. I am pleased to be able to tell the House that the clearing banks have now arranged such a loan for $2½ billion for 10 years. I congratulate them on the speed and efficiency with which they have arranged it. This is, I believe, the largest loan ever raised in the international capital markets.

I can also report further strengthening of our short-term defences for the pound. The Bank of England has agreed with the Federal Reserve Bank of New York that the limit of short-term financial support available under the inter-central bank swap arrangements between them should be raised from $2 billion to $3 billion.

Borrowing is more sensible, in economic and human terms, than trying to cut imports by massive deflation. But no one should imagine that it is a soft option. The interest has to be paid each year, and this will eat into our surplus on invisible account. Later on, instalments of the capital will have to be repaid as well.

I have, of course, considered what direct measures I might take to help to narrow the balance of payments gap. I do not want to use direct restrictions on imports if this can be avoided; they would not be in the interests of the world economy, upon which we depend so much, and would invite retaliation. Moreover, they would have to be accompanied by measures to reduce home demand—otherwise the place of the imports thus kept out might merely be filled by goods produced at home which could otherwise have been exported.

But I have in exchange control another instrument which it makes sense to tighten or relax according to changes in


the prospects for the balance of payments. So I am taking four steps, which will have effect from midnight tonight.

I am tightening the rules for financing both direct and portfolio investment. I fully understand the importance of this investment and the valuable return it brings by way of interest, profit and dividends, which helps the balance of payments year by year. My object is not to stop it, but only to ensure that it takes place without imposing undue strain on the balance of payments. At a time when the Government, as I have explained, will be borrowing to finance the deficit for the nation as a whole, it is right that the private investor, too, should have to borrow abroad to finance his overseas investment.

First, investment in the European Economic Community. Instead of getting a ration of £ 1 million of official exchange for any project in any one year, for the time being such investment must be financed, in the main, without official exchange. The existing rules for investment in the non-sterling area will therefore apply to the EEC also. In practice, this will mean that, apart from using the permitted amount of retained profits—normally one-third—most new investment will be financed with foreign currency borrowing. From this change I hope to produce a saving of £150–200 million in a full year. We have informed the Commission of the European Communities and the other EEC members of what we are doing.

Next, the overseas sterling area. When exchange control was extended to transactions with the overseas sterling area in June 1972, the aim was to avoid harm to the economies of individual countries or unnecessary hardship to individuals. I want to emphasise now that, although I am about to announce a tightening of the rules about the provision of official exchange for direct investment in the sterling area, I have satisfied myself that this should not deter investors, so the countries concerned will not suffer damage. The change I am making is to apply the same financing rules to the overseas sterling area as to the non-sterling area, including, now, the EEC. Experience in the non-sterling area certainly shows that these rules do not prevent a steadily growing volume of

investment. I would expect the same to be true of the overseas sterling area, so long as the countries concerned maintain a climate favourable for investment. The likely saving in a full year is £50 million. gradually increasing.

Next, portfolio investment in the overseas sterling area. When investors sell securities denominated in non-sterling area currencies, they must sell 25 per cent. of the proceeds in the official market. If the securities are denominated in the sterling area currencies there is no such requirement. This is obviously anomalous. There is no reason why United Kingdom portfolio investors in, say, Australia should be more favourably treated than investors in Wall Street; it is right that both should make some contribution to the official sterling market. The sale of 25 per cent. of disinvestment proceeds in the official market will therefore apply to overseas sterling area securities from tomorrow. It is difficult to estimate the likely foreign currency inflow. But the 25 per cent. rule for non-sterling area securities has brought in almost $400 million in 1973, and this figure should now be increased by a useful amount. I have, of course, given advance notice of these changes to the Governments concerned.

Finally, a change to the rules concerning direct disinvestment. Hitherto, the sale proceeds of disinvestment from non-sterling area countries which are not members of the EEC have been saleable in the investment currency market, subject to the 25 per cent. requirement. This rule reflects the time when much direct investment was financed through the investment currency market, but this has not been the case in recent years. The right to investment currency treatment—giving windfall gains on disinvestment—has become anomalous. In future, therefore, the proceeds of disinvestment must normally be sold in the official market.

The measures I have outlined, together with the appropriate management of demand, should help us to achieve a steady improvement in the external account. Meanwhile, we can face the big current account deficit this year with the prospect of an adequate inflow of borrowed funds to see us through.

We have at least one advantage to look forward to. Before too long, we shall


have our own oil supplies from the North and Celtic Seas. We must not imagine that this oil will be the answer to all our problems. At present, we cannot put a figure on the benefits it will offer, since we cannot predict the pattern of world energy supply and demand when it becomes available. But, provided the nation takes its rightful share of the profits, it is bound to bring substantial advantage to our balance of payments.

BUDGET JUDGMENT

I now turn to the issue which must form the core of any Budget speech, the Budget judgment.

Britain's performance in the economic field is not a matter for the Chancellor alone, although he is liable to get the blame when things go wrong. Every Department of Government also has its part to play, but in the last resort success or failure will depend on the efforts of every man and woman in the country. It is they who produce the goods, who spend and save the money. The social and, indeed, the human climate is as likely to influence their efforts as anything which is done in the strictly economic field.

But the Chancellor of the Exchequer has one critical responsiblility which no one else can share: his Budget must provide the framework for effective action by the nation as a whole. It must try to create that specific balance between revenue and expenditure which is likely to influence the level and pattern of demand in the economy in the way most appropriate to the circumstances foreseen in the year ahead. It is a task of appalling difficulty, as all my predecessors know, depending as it does on assumptions about economic behaviour which may often have no firm scientific basis and on predictions about the future which must be drawn from statistics, often unreliable, about the past.

For us in this House, perhaps the best analogy is with the infant art of psephology. We know from recent personal experience how difficult it is to form an accurate picture from the opinion polls of what the British people really think. Still less can we predict, on the basis of even the best information about the past, how the same people will think and vote in

three weeks' time. If this were not so, I would not be presenting my Budget this afternoon.

Demand management is no more reliable an art. We must approach the Budget judgment with the same caution and the same scepticism about the dependability of some of the evidence available as one approaches the decision to call a General Election. The Budget judgment is very like that decision in another respect as well: it is easier to make at some times than at others.

This is one of the more difficult times. In any situation in which such uncertainties abound, perhaps the most important thing is a clear picture of one's objective and of the general principles which must guide one in achieving it.

The challenge the nation faces today, though as formidable as any in our peacetime history, is one we can be confident of overcoming if we can now combine in a sustained and united effort. The rewards of success and the penalties of failure are not to be counted in economic terms alone. Unless we can somehow halt the accelerating inflationary trends in our economy, the resulting political and social strains may be too violent for the fabric of our democratic institutions to withstand. Britain is at present moving fast in the wrong direction. Serious dangers lie very close ahead. Somehow we must steer ourselves on to a safer course. Yet to seek to do so too suddenly could produce the very catastrophe we seek to avoid—and perhaps produce it only a year or two before the offshore oil comes to our aid.

All recent history teaches us that we must not expect or seek too sudden a reversal of the trend. This year our task is to arrest the momentum which has recently developed in inflation and the balance of payments deficit. If we can achieve this in the next 12 months, we can look forward to a steady improvement in the years which follow. It is in this mood that I approach the central decisions which must determine the shape of the Budget as a whole. I have been guided by four crucially important principles.

First, we must make the fullest possible use of the manpower and resources available to us. I totally reject the philosophy that would cure high blood pressure in the economy by bleeding it to death. This principle means more than simply


a high level of employment: it means a resolute attack on waste in every area of the economy—and of our society, too. We must not waste manpower or resources by leaving unused what we should use, or by treating scarce and expensive resources as if they were cheap and abundant, or by diverting resources to prestige projects which bring the nation little material benefit. Indeed, an attack on the waste which has come to disfigure so much of modern industrial society must be a central theme in many areas of our national policy for the years ahead.

Secondly, we must seek a sustained improvement in our balance of payments for all the reasons I have just given.

Thirdly, we must restore the people's confidence in money. The men and women who work to produce our wealth must know that the wage settlements they make will hold their value. Otherwise, inflation will corrupt the whole basis of our society, and because we cannot hope to cure inflation immediately, we must take steps to protect against its consequences those who are least able to defend themselves.

Fourthly, as an essential pre-condition of success in achieving our other three objectives, we must re-create that sense of social unity on which Britain has always had to rely at a time of national crisis. This means convincing the whole nation that the burden of our sacrifices and the rewards of our successes are fairly shared.

The economic judgment of my Budget is concerned with the first three of these objectives, but the essential fourth objective must shave its character at every point.

Let me expand the first two principles, beginning with the full use of our resources. Although I am determined to maintain the momentum now developing in the aftermath of the three-day week, I must ensure that the pressure of demand in the economy does not get out of control, as it did towards the end of last year. The rebound from the depression of early 1972 was allowed to develop so rapidly that from the middle of last year bottle-necks were developing, skilled labour was becoming scarce, and imports were being sucked in. Demand had out-

stripped our capacity. We cannot afford to make that mistake again. But, equally, we must avoid producing a depressed economy and low investment. To get this balance right is, as the House knows, the most difficult matter of judgment at any time. It is particularly difficult at this moment when so many uncertainties cloud the future.

But to achieve growth through the full use of our resources is not enough. We must shift the pattern of growth in our economy towards exports and import substitution. Our balance of payments deficit must be reduced. The measures of exchange control I have already mentioned will help us here on capital account. Of our current deficit, a good part is due to the higher price of oil, and we accept the view of the OECD and of the IMF that it would be wrong for the industrial oil-importing countries to seek to eliminate that part of their deficits in the near future. But in our case we have a large underlying deficit as well. This part of the deficit must be reduced. We must therefore achieve over time a large switch of resources out of domestic use and back into the balance of payments. To illustrate the size of the task the current account deficit in the fourth quarter of last year was equivalent to 4½ per cent. of gross domestic product, a fraction three times as great as that faced by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) when he held my responsibilities after the election in 1964.

Not all the objectives I have set myself can be realised quickly, still less through the medium of a single Budget. The House will recognise that three weeks is far too short a time to turn into practical legislation some of the ideas which I believe are essential to the achievement of our long-term aims. Moreover in the exceptionally fluid state of the world economy developments in the months ahead could well falsify some of our present expectations and call for adjustments in my strategy. I have, therefore, decided not to introduce all my proposals in one Budget. In this Budget I concentrate on those measures which are essential now. If the House and the country permit I intend to introduce a second Budget later in the year. This will not only enable me to deal with some of the more fundamental changes


in the taxation system which I judge to be necessary; it will also give me the occasion and the opportunity to make any further adjustments which are needed to influence demand and keep the level of employment up.

At this moment, if I were concerned only with managing the domestic aspects of our economy, I should prefer to risk having a bit too much demand rather than too little. So I might find the argument for some mild reflation a tempting one. I want to see more investment, and businessmen are more likely to invest if they feel certain about continuing growth of demand for their products. But we cannot shut our eyes to external economic problems, as the previous Government discovered to their cost. Taking our total situation into account, I believe that, given our present external problems, a reflationary Budget at this moment would involve us in unacceptable risks. I do not want to re-create the circumstances of last year when valuable opportunities to export were lost because products which could have been sold abroad were pulled into the home market and our imports continued to rise at an alarming rate.

I have therefore decided that my Budget must ensure that there is enough room fully to exploit the opportunities for exports which our present competitive position has opened and also for the industrial investment needed for export-oriented growth. My objective is to see that the aggregate demand in the economy, including export and investment, rises at a rate which can be met comfortably by increasing output, and to do so with the minimum of disruption and unemployment. This must be a continuing process to which I shall make a further contribution in my next Budget.

Some hon. Members may argue that I should not leave room for the expansion of exports and investment until the demand is clearly there. But there is all the evidence we need that the demand is waiting to be met. Our manufacturers now enjoy a very considerable price advantage over their competitors. Since exporters are free from domestic price control, they can expect greater profits from selling abroad.

Of course there are bound to be some frictional costs in adjusting to a new pattern of output and demand, but we

must make that adjustment. Designs will have to be changed for export markets and to compete with imports, factories will have to be re-tooled, and so on. My strategy does not ignore these costs, but will keep them to the barest minimum. Not to leave room for the growth of exports and investment would simply make certain that this growth would never take place.

Before coming to my Budget judgment, I listened to a good deal of skilled advice from both inside the Treasury and without. I think the right hon. Member for Altrincham and Sale will agree that advice is perhaps the only commodity of which no Chancellor will ever feel a shortage. I only wish that I could believe it all and that it was possible for me to change my views as rapidly and as completely as some of the distinguished writers who offer me advice. Everyone is agreed a least that in the immediate situation there is excess demand. Opinion is less unanimous about the position later in the year, which is hardly surprising. The precise course of world prices and of world trade is uncertain. The effect of three-day working on private investment, including the rebuilding of stocks, is particularly difficult to forecast, So, too, is the likely course of private consumption in the light of the new relationship between wages and prices which threshold payments will create. Weighing up all this, my judgment is that this Budget should be broadly neutral on demand, with the bias, if any, on the side of caution.

This does not mean that we can afford a public sector borrowing requirement at anything like the level of last year. The vast deficit of the public sector was then an important factor in the excessive monetary expansion. So I am aiming at a massive reduction in the public sector's borrowing requirement, a reduction of about £1,500 million compared with 1973–74.

I have considered carefully whether I should take any special action to promote investment. As a country we have an exceptionally large arsenal of investment incentives, and I do not think that it would be right to make it larger. We must, however, help industry in the development areas, as the House knows. We will therefore at the least


maintain the existing arrangements for regional employment premium while con-considering further possibilities for the future. We will continue the existing rates of payment beyond September 1974, which is the date when the present commitment to maintain these rates runs out, and the Finance Bill will provide accordingly.

But the best assurance that businessmen can be given as a basis for their investment decisions is that it is the aim of Government policy to maintain output at a high and sustainable level. I hope that this can now be seen to be my aim.

But my Budget is also concerned with the deliberate and carefully considered redistribution of fiscal burdens so as to help those less able to bear them and place them on the shoulders of the better off. I believe that this Budget must help restore that sense of national unity which has been so lacking in the past few years. It must be an essential instrument in establishing that social contract on which the solution of all our problems must depend.

PENSIONS ETC.

My right hon. Friends and I made it clear in the last election that in the economic situation we were likely to inherit the scope for increasing public expenditure would be very limited the first year, that we would concentrate our immediate efforts in the three fields of the greatest and most urgent importance to the mass of the British people—pensions, food and housing. I now come to our proposals in these three fields.

First, pensions and social security. As we made clear in the debate on the Address, the Government consider that a substantial improvement in pensioners' standards is an essential condition of securing greater social justice. The improvement in pensions is long overdue. There is no better way of making a major impact on the problem of poverty in our society than by helping that section of our people which contains by far the largest proportion of the poor.

Our first priority is, therefore, to fulfil our promise to increase the standard rates of pensions to £10 for a single

person and £16 for a married couple. We have now decided that for this year this will be done not in October, which is the usual time for uprating pensions, but from the earliest date which is administratively feasible. Pensions will, therefore, be increased from 22nd July. My right hon. Friend will make a full statement tomorrow on the Government's proposals but as the House will wish to see how these fit into the context of the Budget, I shall explain the salient features now

Parallel with the increase in pensions, there will be corresponding increases in related long-term benefits. Supplementary pensions will be increased by the same amounts as national insurance pensions, that is, by £2·25 and £3·50. Short-term benefits, such as those for the unemployed, sick, and the ordinary rates of supplementary benefit, will be increased by amounts more than sufficient to maintain their purchasing power. They will be increased by £1·25 for a single person and £2 for a married couple. Fuller details of these increases and of improvements in related benefits, including a relaxation in the earnings rule for pensions, will be announced by my right hon. Friend tomorrow.

The total cost of these improvements is estimated at about £860 million in the financial year 1974–75 and about £1,240 million in the 12 months from 22nd July. Of this, about £100 million and £140 million respectively represent the cost attributable to benefits which is wholly financed by the Exchequer. The balance of £760 million in 1974–75 and £1,100 million in a full year represents the additional cost to the National Insurance Funds.

These costs are large, although a substantial part would of course have been required for the increases to which our predecessors committed themselves. The community must meet the cost in one way or another. So far as national insurance contributions are concerned, we have to ensure that the extra burden falls on those best able to bear it, whether employers or employees. For this reason we will raise the weekly earnings limit for graduated contributions from £54 to £62 and the full rate of graduated contributions from 5 per cent. to 5½ per cent. Employers' flat-rate contributions in respect of men will be increased by 44p a week. This will bring the employers'


share of contributions up to about the average for the European Economic Community. But the flat-rate contribution by employed men will be reduced by 9p a week. There will be comparable changes for women and the self-employed and non-employed.

The major share of the cost will thus be levied through employers' contributions. Moreover, the share which falls to employees will be distributed to the advantage of the lowest paid. The effect for an employed man earning £62 a week or more will be an extra contribution of 57p a week; if he earns £40, he will pay 7p a week more. But if he earns £20, he will pay 3p a week less than now. The Exchequer will continue to contribute the equivalent of about 18 per cent. of the income from employers and employees.

I estimate that the extra amount of contributions payable as a result of these changes, with the associated Exchequer contribution, will be about £615 million in 1974–75. This will ensure that the National Insurance Funds have ample resources to cover the full cost.

FOOD SUBSIDIES AND HOUSING

Food Subsidies

As the House knows, my right hon. Friends have felt for some time that in the current situation the most immediate and effective way of helping the family budget is to hold down and even, if possible, to reduce the prices of essential foods, a field where the previous Government declined to apply controls and where prices have risen twice as fast as the cost of living as a whole. The action on which we have decided includes a selective programme of price control in conjunction with Exchequer subsidies. At present, apart from school meal charges and the EEC scheme under which butter is subsidised on a limited scale, the only such subsidy is for milk. The provision already allocated for this for 1974–75 by my predecessor was £50 million which, however, is sufficient to maintain the existing rate of subsidy for only a matter of months.

We must now extend these arrangements in the way best calculated to use the sums which can be made available. I believe that in the current year it would be right to spend about £500 million extra on food subsidies on top of the limited existing provision I have already men-

tioned. My right hon. Friend the Secretary of State for Prices and Consumer Protection will therefore seek the additional powers appropriate for carrying out this selective programme. As she has already indicated, arrangements for bread are already being worked out and, of course, subsidies for butter and milk will continue to form part of the programme. In fact, a measure will be put before the House which will reduce the retail price of a pint of milk by 1p below its present level at a stroke. Further measures affecting particular food items will be decided upon within the framework of this programme as the situation requires.

The effect of this programme, including the whole of the milk subsidy, will be to reduce the rise in the retail price index this year by something like 1½ per cent. and the rise in food prices by roughly 6 per cent. In my opinion, food subsidies on this scale must be a pre-condition of any voluntary agreement on incomes. I hope that the House as a whole will agree that nothing less will suffice to give ordinary families the help they need to cope with the alarming increase in their cost of living. Together with our efforts to alter the impact of the common agricultural policy on British food prices, they represent a substantial contribution by Government policy to reducing the impact of inflation at what is perhaps its most sensitive point.

Housing

Housing is the other one of our three priorities for action in our first year. Immediately on taking office, my right hon. Friend introduced a freeze for all residential rents. This will add about £70 million to housing subsidies in 1974–75 and this has been allowed for. It will reduce the increase in the retail price index by 0·7 per cent. over the year. But the main aim must be to increase house building.

The figures in the last public expenditure White Paper provided for an annual rate of house building by local authorities of no more than about 60,000 in England. In fact, even before the Budget it was clear that local authorities were planning to go beyond this and we adjusted the figures accordingly. But this is not enough at a time when the number of the homeless is increasing week by


week and waiting lists are growing. My right hon. Friends will therefore encourage local authorities to make an immediate further increase in their programmes.

Meanwhile, in the private sector there are at least 30,000 houses completed, or virtually completed, which have not been sold. We shall therefore, as an emergency measure, encourage local authorities to buy these houses where they are of the right standard and can be acquired at reasonable prices and are in the right places to meet urgent housing needs.

We have made clear our belief that, particularly in the worst areas of stress, the development of municipal ownership is essential. But this programme cannot have quite so high a priority as the steps I have already described, which are designed to add significantly and quickly to the stock of housing. We shall therefore be discussing with local authorities the priorities they should follow in the immediate future before long-term programmes can be drawn up.

The new provision which I am making in 1974–75 for these programmes of house building and acquisitions is of the order of £200 million. Taking into account the expansion already proposed by local authorities, I expect the addition to the previously published expenditure figures for these programmes to be as much as £350 million.

OTHER PUBLIC EXPENDITURE

We have given priority, as we said we would, to higher pensions, to subsidies for essential foods, and to rents and housing. Against these increases in public expenditure, we must make savings in public expenditure wherever possible.

Nationalised Industries

The impact that the three-day week has had on the nationalised industries means that we must take immediate action to reduce their deficits. We inherited a situation in which the estimate of revenue subsidies required by the nationalised industries in 1973–74 had risen far above the previously planned figures to a total of £800 million and, without large and early increases in their prices, this figure was bound to escalate to a much higher level

in 1974–75. Part of the £800 million consisted of subsidies paid to the railways and the coal industry for reasons of social and industrial policy, but a substantial further part resulted from applying to the public sector a more stringent policy of price restraint than to private industry, and the situation was made worse by the losses arising from the three-day week.

I cannot believe that the previous Government would not have taken action to deal with deficits on this appalling scale. Indeed, now that I have the figures, I must confess my surprise that the previous Chancellor did not take the opportunity to do so in his December measures. The subsequent two months of short-time working have produced a crisis situation.

When we came into office three weeks ago, we found on our desks the most urgent proposals from the nationalised industries for a round of price increases. The Ministers concerned immediately carried out appropriate consultations with the industries. We could not allow the existing state of affairs to go on. Costs had to be reflected more closely in prices. There is no other way of avoiding a heavy excess of demand for the products concerned, the uneconomic use of resources, the collapse of all financial disciplines, and an unacceptable level of support by the Government. At the same time, the situation had gone too far to be rectified completely by a single round of price increases. The balance which has been struck is therefore as follows.

Coal

The National Coal Board has already announced an increase in prices of industrial coal from 1st April designed to yield extra revenue of 270 million. There is to be a further price increase on industrial coal in the autumn designed to yield about £100 million. There is also to be an increase in National Coal Board prices to merchants for domestic fuels of about £2·50 to £3 a ton. In order to mitigate the impact on family budgets, this will be deferred until November, although the National Coal Board will not this year be offering a summer discount. These measures are designed to bring the selling price of coal more nearly into line with production costs and to reduce financial support for the


National Coal Board to not much more than an estimated 50 million in the coming year.

Electricity

Electricity prices have given us the most difficult decision. Here, too, it is right that prices should reflect the realities of the energy situation. On the other hand, if we had imposed the full increases proposed for domestic and other consumers on quarterly accounts, including pre-payment meters, this would have meant a 50 per cent. price increase. We are therefore asking the industry to restrict these increases to the amount required broadly to cover its higher fuel costs alone. Even this will mean price increases to domestic consumers averaging about 30 per cent. on bills reaching most of them from the beginning of August.

Gas

In view of this and to avoid a further addition to domestic fuel costs, we are asking the British Gas Corporation to refrain from putting forward any price increase.

Railways and Post Office

On the other hand, the railways and the Post Office are now running large and increasing deficits. Their boards are therefore putting proposals to the Price Commission for increases within the code to take effect in the summer. The proposals by British Rail involve an increase in passenger fares of around 12½ per cent. and in freight charges of 15 per cent. The provisional proposals by the Post Office point to an average increase of between 15 per cent and 20 per cent. in telecommunications charges, an extra ½p on the stamp for second-class letters, and 1p for first-class letters

General

Obviously, some of these increases are large, and I have explained to the House why. But I hope industrial users will recognise that their competitors will also have to meet increases in energy prices and other costs. We have helped domestic users by delaying the increase for domestic coal and substantially reducing the increase in electricity charges.

The effect of these decisions will be that we are supporting prices in these

nationalised industries, on present forecasts, by about £500 million in 1974–75. This compares with a potential £1,400 million if none of these increases took place. Of the revenue support total for 1974–75, roughly speaking £400 million will be divided between the electricity industry and the railways, and the balance between the National Coal Board and the Post Office.

Steel

In view of the large increases in its costs, the British Steel Corporation, which of course receives no revenue support, is raising its prices immediately by an average of 25 per cent. For tin-plate used for canning human food, however, it will limit the increase to 15 per cent. It intends to keep the new prices stable for the rest of 1974.

Defence

In the Queen's Speech we said that we would be pursuing a defence policy directed to maintaining a modern and effective defence system while reducing its cost as a proportion of our national resources. As the House knows, we have therefore set in hand a thorough-going review of our defence commitments and capabilities so that we can assess how best to achieve the required balance between continuing to meet essential defence needs while securing a necessary reduction in the proportion of our resources we devote to defence.

We remain firmly committed to the North Atlantic Alliance, but Britain, with her unique economic difficulties, should not bear a proportionately larger burden in supporting the alliance than her major European partners. A strong economy is the only effective base for the discharge of our political and military responsibilities in the world. Outside Europe we shall examine the contribution made in each case by our military presence to the maintenance of peace and stability, recalling the decision taken by Her Majesty's Government in 1968 that our forces should be withdrawn from South-East Asia. There will be full consultation with our allies wherever their interests are involved.

We have already decided to make a further cut of £50 million at 1973 prices in defence expenditure for 1974–75, in addition to the £178 million announced


by my predecessor on 17th December. This brings the total defence savings, compared with the provision in the last Public Expenditure White Paper, to £228 million. It means a reduction of £55 million at 1974 prices in the defence budget Estimates for 1974–75 published today bringing the total down to £3,612 million.

Concorde

As I have said, if we are to make full use of our resources, we must avoid spending large sums of money and skilled manpower on projects which use high technology and are unlikely to bring an economic return. My right hon. Friend told the House last week some of the financial considerations affecting the future of the Concorde project. We are already urgently discussing the future of this project with our French partners and with both management and unions in the industries concerned so as to be able to reach conclusions as soon as possible. Meanwhile in framing my Budget proposals I have not allowed for any expenditure on development or production beyond the existing programme.

Maplin

As announced by my right hon. Friend the Secretary of State for Trade, the future of the Maplin project is now under review. Meanwhile, no financial provision will be made in our public expenditure plans for further work on this project. The amount involved in 1974–75 is £17 million and for the three following years together a further £139 million.

Channel Tunnel

My right hon. Friend the Secretary of State for the Environment will be making a statement on the Channel Tunnel in the near future.

EEC Budget

We have said that we will seek a fundamental renegotiation of the terms of entry to the EEC, including the balance of financial advantage between the United Kingdom's contribution to the Community Budget and receipts from it. Under existing policies, in the coming financial year we would be paying £210 million and getting back only about £120 million. At the very outset

of renegotiation it is too early to put a figure on what improvements we can obtain, or to say when we would begin to benefit, but I can assure the House that we are determined to get a better deal for this country; every million pounds we can save in this field will help us in many ways.

Other Programmes

The savings we hope to achieve in the fields I have just mentioned will help to reduce the burden imposed by our proposed increases in expenditure on pensions, food and housing. They will still leave large sums to be covered by increases in taxation. So they will not allow us to increase expenditure on other major programmes, desirable as this would be in other circumstances. I cannot, therefore, at this time budget for any net increases in other programmes in the coming year following the reductions which my predecessor announced on 17th December. As the situation becomes clearer, we shall of course consider the further reshaping of all our expenditure programmes in the light of the general prospects for the economy and our own priorities.

Mr. Peter Emery: Will the right hon. Gentleman give way?

Mr. Deputy Speaker (Mr. George Thomas): Order. It is a long-standing convention that the Chancellor of the Exchequer is not interrupted during the Budget Statement.

SAVINGS

Mr. Healey: The increases in expenditure on pensions, food and housing will temper the impact of inflation and thus make a significant contribution to one side of the social contract on which the Government's whole policy is based. They will go some way to protect the standards of living of ordinary families, giving particular help to retirement pensioners, those with large and growing families, tenants in local authority and private accommodation, and all those sections of the community who are less well placed to protect themselves. They will help to maintain the value of the pay packet and to reduce the presssures for higher pay which are generated by rising prices and the fear that inflation will accelerate.
But all these measures have to be paid for, not just in money, but in resources, for they will rapidly increase demands on the nation's capacity for providing goods and services. If we are to help the less well off to have a higher standard of consumption than they would otherwise have been able to afford, the rest of us must be prepared to consume less. To the extent that consumption can be reduced by increases in saving, this will reduce the need for additional taxation.
I therefore turn to my proposals for national savings where the Government have a direct responsibility. I will not comment today on the recommendations of the Page Report. These require more consideration than I have been able to give in the last three weeks. However, without prejudice to our decisions on the Pare Report, I have decided to make the following immediate improvements in national savings facilities.
First, there will be a new National Savings Certificate, to be known as the Fourteenth Issue, offering a yield of 7·59 per cent. tax-free over four years. Secondly, there will be a new issue early in June of the British Savings Bond to replace the current issue. This will have an interest rate of 9½ per cent. and a 3 per cent. tax-free terminal bonus. Thirdly, by increasing the underlying interest rate, I propose to add some £500,000 a month to the amount available for distribution in premium bond prizes. Fourthly, I propose to introduce a new issue of Save-As-You-Earn contracts offering a gross return of 11·9 per cent. over five years and 12·6 per cent. over seven years. Finally, following recommendations in the Page Report, I propose to make certain smaller changes in the rules for deposits in the National Savings Bank. The Treasury will be announcing full details of all these proposals this afternoon, and copies of the Press notice will be available in the Vote Office.

TAXATION: INTRODUCTION

I now turn to the only method by which I can cover the remaining cost of our expenditure proposals, a method that must also play the central rôle both in my management of the economy and in achieving that redistribution of wealth and income to which my party is committed—taxation. I think that the House

will at least agree that I have never sought to conceal from the British people the fact that the social changes for which my party stands and on which it fought the last election could not be carried through without some increases in taxation and that those increases could not be confined to the very rich.

My predecessor used taxation to redistribute income and wealth in favour of the better off as against the average worker, in favour of the single man as against the family, in favour of those who make money as against those who make goods, in favour of luxuries as against necessities. I believe that Britain cannot achieve the national unity required to surmount the problems ahead unless that process is now reversed.

This is an area where the needs of economic management coincide with the needs of social justice. It is essential that we should fully cover the demand effects of the increases in expenditure to which the Government have committed themselves. But to reduce overall demand beyond what is needed to cover our expenditure and leave enough room for exports and investment would mean running unacceptable risks of unemployment and unused capacity later in the year. The Budget must avoid the twin perils of demand inflation and demand deflation.

Subject to this overriding requirement, I judge it to be essential to improve the performance of the public sector accounts. In 1973–74 the public sector had a financial deficit, that is to say, a shortfall of saving over investment, estimated at some £3,100 million. A little under one half of the capital requirements of the public sector was met from the current surplus. When account is taken of the increase of some £1,170 million in public sector financial assets, a borrowing requirement estimated at around £4,250 million emerges.

Such figures rightly cause great concern among informed opinion. I have therefore set it as my aim that, without modifying my target for the path of output and demand, I should substantially increase the volume of public sector saving with a view to covering a much higher proportion of the public sector's capital formation from the current surplus and hence to reduce both the public sector financial deficit and the borrowing requirement.

The best way to ensure that this deficit is cut sufficiently without excessive cuts in demand is to concentrate tax increases on those who are less likely to reduce their consumption when their taxes go up. It is a fact of life—and one of great social as well as economic importance—that a tax is more likely to cause reduction in consumption the poorer the family on whom it falls. But the richer you are, the less you need to cut your standard of life when your taxes go up; you are more likely to meet the increase in your taxes simply by drawing on your bank balance.

For this reason, as hon. Members opposite are never slow to remind me, taxes on the wealthy, or indeed on wealth itself, have less effect on demand than taxes on the poor. But they reduce the public sector deficit to the full extent of their money value. So I hope that I shall carry with me at least those many right hon. and hon. Members opposite who complained about the excessive size of the public sector deficit in recent years when I put the major part of the new taxation this year on the better off, who are best able to carry the burden—

Mr. John Billen: indicated assent.

Mr. Healey: That is right. I always recognise the hon. Gentleman as one of those with the greatest integrity in the House. I was saying that the better off are best able to carry the burden and are likely to reduce their consumption least in doing so.
I suspect that hon. Members on this side of the House will not require these slightly arcane economic arguments to persuade them that what I propose is right.
It would be convenient for us all if the whole of the additional burden could be imposed on people so rich that they would not even notice it, but in the world as it is there is just not enough taxable income at the highest levels to make this feasible. The proposals that I shall be announcing will ensure that the rich bear a higher share of the tax burden than they have under the last Government. But it is arithmetically inescapable that not only the wealthy but everyone who enjoys

an income somewhat above the average must expect to have to make some contribution through taxation to the cost of the essential measures intended to protect the living standards of those who earn less than the average.

INDIRECT TAXATION

I deal first with indirect taxation. Here my aim is to help pay the cost of reducing the price of the more essential goods by increasing the tax on the less essential. The previous Government abolished purchase tax, with its separate rates, in favour of the value added tax with its single positive rate of 10 per cent. In this form it suffers from a major disadvantage. Any increase in the standard rate of 10 per cent. would push up the cost of living for the average person by raising prices across the whole range of taxable goods and services, essential and less essential alike. For this reason, I do not propose any change in the standard rate of VAT.

However, although I am not altering the standard rate of VAT, I am proposing some changes in the coverage of the tax. Many hon. Members, on both sides of the House, have always argued that it is inexcusable to charge VAT on essential aids for the disabled, such as kidney machines and invalid chairs, and on protective clothing, such as miners' and quarrymen's helmets and safety boots. I agree, and I shall be bringing forward an order to zero-rate those classes of goods as soon as possible. The consequent loss of revenue will be very small.

I have considered giving similar help to charities by zero-rating them. But there are many difficulties, not least how to define what most of us would regard as genuine charities—charitable status has been much abused in recent years. So I must renounce that option now. However, most charities will benefit from some of the proposals that I shall be announcing later.

When I commented from the Opposition benches on last year's Budget proposals, I complained that my predecessor had decided to cut the tax on peanuts, candy floss and humbugs, when the need was to help reduce the cost of essential foods. I have concentrated my aid where it always should have been—on essentials.


We must find the means of paying for this aid. I have decided to return to the original provisions of the Finance Act 1972 and apply the standard rate of value added tax from 1st April to confectionery, soft drinks, ice cream, potato crisps, and so on. which used to be charged with purchase tax. I propose to make this change by order. I estimate that it will yield £125 million in a full year.

I appreciate that this step may be unpopular with the children, although I met a delightful young lady outside No. 11 Downing Street this morning who recommended me to take precisely this step. But I know that many of those concerned with children's dental health will welcome it.

I now pass to the Customs and Excise revenue duties—those on alcoholic drinks, tobacco and hydrocarbon oils, for example. As the House knows, these are not levied as a percentage of price, like VAT. They are specific sums levied on given quantities of the goods concerned. and these sums have not been increased since 1969, although prices generally have increased greatly.

In other circumstances, I should be tempted at least to restore the real value of the revenue duties to what they were five years ago, and I believe that most people would regard this as highly reasonable in present circumstances. This would have increased Government revenue by about £1,450 million in a full year, enough to cover the whole cost of all the Government's expenditure proposals—pensions, food subsidies, and housing, the lot. But to do so now would produce a substantial net rise in the retail price index which would add to the pressure on the threshold provisions of stage 3 which we have inherited. I must therefore resign myself to a more limited objective.

So far as oils are concerned, I recognise that, because of the increases in world prices, the cost of all petrôleum products has risen sharply. Nevertheless, I believe that there is a good case for increasing the total taxation of road fuel, both to help conserve our supplies of oil and to reduce the pressure on our road system and to make life more tolerable in our towns and countryside. This will help to secure the economic use of scarce

resources and so contribute towards achieving one of my main aims.

However, I appreciate that a straight increase in the revenue duty on petrol and derv would increase commercial transport costs and this would give a further upwards push to prices in general. I therefore propose that the standard rate of value added tax should apply to petrol and other road fuels from 1st April, The normal VAT provisions for deducing input tax will apply to the VAT on road fuel purchased by all commercial and industrial undertakings registered for the tax, and neither industrial costs nor bus fares should therefore be affected by the increase.

I estimate that this change, which I propose to make by order, will yield £150 million in a full year. While on the subject of bus fares, I should mention that the Government intend to uphold the decision of the previous Government to increase the remission of fuel duty paid in respect of bus stage services.

As with hydrocarbon oils, so the rates of duties on alcoholic drinks and tobacco have not been raised since 1969. Indeed, when VAT was applied to these goods, the rates of revenue duty were abated by such amounts as were necessary to ensure that the total tax burden through duty and VAT was not, on average, increased. I consider that a greater contribution should now be sought from these goods. I therefore propose that the duty on spirits should be raised by such an amount as would increase the total tax burden—including the consequential VAT effect—by the equivalent of 20p a standard bottle of whisky or gin of average strength, and proportionately for other spirits.

I also propose to increase the tax burden—including VAT—on all wines, including British wines, by the equivalent of 10p a bottle on average. I think it appropriate that the same increase should apply to light table wines, consumption of which has been increasing rapidly, as to fortified wines.

In normal circumstances, I should have preferred not to change the duty on beer. But times are not normal, and I am sure that beer drinkers will accept that they, too, must make a further contribution. I therefore propose to increase the tax


burden—including VAT—on beer by the equivalent of 1p a pint on average.

I estimate that these changes, which will come into force tomorrow, will yield in duties an additional £40 million from wine and British wine, £20 million from spirits, and £100 million from beer in a full year, together with another £5 million for VAT on these goods.

In the case of the tobacco duty, too, I believe an increase is justified. Consumption has been rising steadily and, while I do not necessarily subscribe to the principle that the consumption of tobacco products should be curbed by fiscal means, I propose to increase the duty by such an amount as will increase the total tax burden—including VAT—on cigarettes by an average of 5p a packet of 20. I estimate that this increase, which will come into force tomorrow, will yield an additional £200 million in tobacco duty in a full year, together with £10 million for VAT.

I have carefully considered whether I can seek a contribution from the betting duties. I have concluded that an increase in the rate of duty on on-course betting would not be in the best interests of racing and would not be justified. The same considerations do not, however, apply to off-course betting, and I propose to increase the rate of duty from 6 per cent. to 7½ per cent. I should make it clear that I have in no way been influenced by reports of increased business done by bookmakers in conditions of electoral uncertainty. Any profits they may have made in these conditions recently are unlikely to be repeated for some time to come! I also propose to increase the rate of pool betting duty from 33⅓ per cent. to 40 per cent. I estimate that these changes, which will effectively operate from the end of this month, will yield £30 million in a full year.

The total yield in a full year from all the changes in indirect taxation I estimate at £680 million. The yield in 1974–75 is estimated at £585 million. This goes a long way to cover the demand effects of the increases in food subsidies and represents a shift of price from essential to less essential goods which I hope the House will approve.

DIRECT TAXATION: LOOPHOLES

Tax Credits

Before describing my direct tax proposals, I should outline very briefly the Government's position on a tax credit system.

We believe, as we explained at length in opposition, that there are serious drawbacks to the tax credit scheme proposed by the previous administration. They were fully described in the Minority Reports of the Select Committee. We have not taken any decision against the principle of a negative income tax, which was the subject of considerable study under the previous Labour Government, but our immediate priority has been to carry out the major increase in national insurance benefits which I have referred to. We are also pledged to improve the present provision for children, but this must wait until a later Budget.

Taxation of Capital

The Labour Party has pledged itself to achieve a major redistribution of both wealth and income. It has always been our aim to use the taxation system to promote greater social and economic equality. We live in a country where wealth is less equally divided even than in the United States and where differences of personal wealth serve to reinforce and perpetuate that type of class division which has done as much as anything to prevent Britain from achieving the same level of economic performance as most of her competitors in the Western world. The time has now come for a determined attack on the maldistribution of wealth in Britain.

To be effective, this attack calls for thoroughgoing reforms in the taxation of capital which can only be accomplished in stages. I shall approach the task as follows.

First, the Government intend to introduce an annual wealth tax on the rich. Such a tax is an accepted feature of many other countries' taxation systems, but it will be a new departure in this country, and I believe that it should be introduced only after a thorough public discussion about the precise form it should take, the


rate at which it is levied, and its relationship with other forms of taxation. My first step towards this reform will, therefore be the publication of a Green Paper during the summer.

Estate Duty

Secondly, I intend to take measures to close the loopholes which prevent the estate duty from performing the rôle assigned to it. Nothing is more offensive to the vast majority of ordinary taxpayers, most of whom are subject to PAYE, than the knowledge that people far better off than themselves are avoiding taxation by exploiting loopholes in the existing law. If the existing estate duty operated effectively, the great concentrations of private wealth would already have been broken up and with them many of the unfair advantages enjoyed by generation after generation of the heirs and relatives of wealthy men. In practice, however, the estate duty has always been a largely avoidable, indeed, a voluntary, tax. In particular, it does not bite on transfers of wealth made long enough before death to fall outside the charge. My first priority is to remedy its defects.

The USA, Australia, Canada and most of Western Europe have found it necessary to reinforce their estate duties or inheritance taxes with gift taxes levied either on the donor or donee. I therefore propose to introduce this year in my second Finance Bill a tax on lifetime gifts—that is, any transactions containing an element of bounty and including gifts in settlement—which will mesh in with the existing estate duty so as effectively to replace it with a comprehensive tax on all transmissions of personal wealth.

Since the estate duty is charged on the testator's property and not on the donee's receipts, it follows that the new associated tax on gratuitous transfers of capital during life should fall on the donor, as it does in the United States, but the rates will not necessarily be as high as in the estate duty. The estate duty in its present form has been part of our tax system since the reign of Queen Victoria. We may argue from time to time about the precise rates at which estate duty is levied, but I cannot believe that any hon. Members can reasonably complain if I now take steps to see that a tax which has been on the statute book for nearly 80 years is at last made effective.

The new tax will take effect as from today and will include provision for a charge, falling on trustees, on capital taken out of a settlement and on changes in beneficial interests in possession under a settlement. My hon. Friend the Chief Secretary will give more details of my proposals on Thursday.

I recognise that to some who may be affected by these new tax proposals and who are unfamiliar with the way they operate in other Western countries they may seem revolutionary in the extreme. I can assure them that, while I am determined to ensure that the new taxes will be effective instruments for redistributing wealth as a means to greater justice and equality in our society, I am concerned that they should operate fairly on those affected and I will listen to any reasonable representations which will help me to secure this end.

Land and Property Development

I come now to a series of other measures which are designed to prevent individuals or groups from escaping taxation which the community as a whole undoubtedly believes should be paid. First, the taxation of land and property development, where, I think the whole House agrees, action is long overdue.

In the Gracious Speech it was said that proposals would be prepared for bringing into public ownership land required for development. Work on these proposals is pressing forward, but it will take some time to carry the necessary legislation through. In the meantime, I propose to continue with the proposal, announced on 17th December last, for charging as income certain capital gains arising from the disposal of land and building with development value or potential. It would not be right that disposals of land made since 17th December, which will have taken into account this proposal, should not bear the impact of the tax changes proposed.

The necessary legislation will be included in the Finance Bill. It will, I fear, be lengthy and complex—something that my predecessor will remember—but I hope that I can count on co-operation in its passage from all parties in the Opposition. In preparing our proposals for bringing development land into public ownership, we shall of course have


to consider their relationship with the tax system in general and with these last proposals in particular.

The proposals announced on 17th December had a second aspect, namely, that the first letting of a non-residential development should be treated as a disposal for the purposes of tax on capital gains. I propose also to implement this proposal, since it is already well prepared. I made it clear after the December proposals were announced that I did not regard them as adequately dealing with the gains made from property development. I have not changed my view, and will be considering in the coming year what further action is required.

Taxation of Foreign Income

I now turn to the subject of the taxation of foreign income, a subject which aroused great public interest during the so-called Lonrho affair last spring. In the course of last year's Finance Bill debates, we discussed this whole area in some depth. My predecessor informed the House that a review of the whole subject was being undertaken by the Inland Revenue and that he would take account of the result of this in his 1974 Budget. This task now falls to me.

As the House knows, it has been the law for many years that where a man goes overseas to do a job and all the duties of the job are carried out abroad, the earnings from the job are taxable on what is called the "remittance basis", that is, if and when they are brought back to this country. This was, perhaps, a reasonable approach before the days of air travel and multinational companies, but in modern conditions these provisions can be and are used by United Kingdom residents to avoid their proper tax liabilities. For the future, it is clearly imperative that we should put a stop to the avoidance of tax by artificial devices of the kind which received so much publicity last year.

My proposals will apply from the start of the 1974–75 tax year. They are as follows. First, the remittance basis will in general cease to apply to earnings by United Kingdom residents from overseas employments, trades and professions, and the basis of taxation will be changed

instead to the income arising from overseas employment, irrespective of the amount remitted. But, because of the special considerations applying to incomes of this kind, the tax assessment will be limited to 90 per cent. of the full amount of the income. In this way we shall recognise the special importance to the United Kingdom economy of this income and the expenses which are often incurred in earning it, and at the same time we shall ensure that the individuals concerned do not escape tax. The same treatment will apply to pensions from overseas received by United Kingdom residents. They will pay on the full amount, subject to the 10 per cent. reduction.

My hon. Friend the Chief Secretary will later announce somewhat similar proposals applying to foreigners temporarily working in Britain whose employer is resident abroad. Obviously they are not in quite the same position as persons who live here on a permanent basis and they will be assessed to tax on half of their earnings.

Tax avoidance—Life assurance etc.

I am also taking measures to end some serious abuses of the present tax reliefs for Life Offices and Friendly Societies.

First, guaranteed income bonds. These bonds have exploited the present rules relating to the annuity business of a Life Office in order to offer an exceptionally high net rate of return—currently around 11 per cent. for a basic rate taxpayer. They are causing not only an unacceptable loss of tax, but serious damage to other savings media. After full consultation with the Life Offices Association, I have decided to impose a basic rate tax charge in addition to the higher rate tax charge for which the law already provides on the profit element realised when the investor effectively "cashes" a deferred annuity. The necessary legislation will be included in my second Finance Bill. It will affect all bonds issued after today.

Secondly, surrender of qualifying life assurance policies. A number of artificial schemes have been devised for the partial or complete surrender of a policy's value with the effect that the policy holder is entitled to claim tax relief in respect of an amount of premiums greatly exceeding his actual net outlay on the policy


concerned. Once more after full consultation with the Life Offices Association, I have decided to introduce arrangements whereby in defined circumstances the amounts to be surrendered to the policy holders are reduced by the whole or a part of the tax relief which the policy holders have been entitled to claim in respect of those policies. The necessary legislation will also be included in my second Finance Bill. It will apply to surrenders of bonuses in the same way as other surrenders in respect of life policies, and will apply to all policies taken out after today.

Thirdly, Friendly Societies. These societies have traditionally existed to provide relatively modest cover against needs arising from, for example, sickness, old age and death, and their income has been exempted from tax accordingly. Recently, the Inland Revenue has become aware of attempts to use the Friendly Societies' exemption as a cover to build up tax-free funds on behalf of wealthy investors. I regard this as a particularly blatant form of tax avoidance.

After full consultation with the Friendly Societies Liaison Committee—I should emphasise that societies represented on the committee have not been involved in transactions of this kind—I have decided to introduce in the Finance Bill measures to secure that the Friendly Society tax exemptions are denied forthwith to the bodies organising these schemes and that a tax charge is made on any gain accruing after today and realised by an individual on encashment of his investment. Further details of these new measures will be contained in a Press notice which I have instructed the Inland Revenue to issue this afternoon.

Share Option and Incentive Schemes

I also propose to reverse the previous Government's legislation on share option and incentive schemes. As we made clear when we were in opposition, we have always regarded the benefits to directors and employees under schemes of this kind as part of the pay for the job, and it follows that such benefits ought to be taxed in the same way as normal remuneration instead of being liable simply at capital gains tax rates. Legislation will therefore be included in the Finance Bill to impose full income tax liability on benefits from all share option and incen-

tive schemes, that is including the employee own-as-you-earn scheme as well as the so-called executive schemes. The legislation will have immediate effect and, in the case of share options, the charge will apply to all options exercised after today.

Parent/Child Aggregation

Another measure of the last Labour Government which our predecessors reversed was the provision under which a child's investment income was aggregated for tax purposes with that of the child's parent. When in Opposition, we made it clear that we regarded aggregation as socially just and that we should restore the position when we returned to power. This I now propose to do, but because of the preparatory work required, aggregation cannot commence until April 1975, and the necessary provisions will therefore be included in my second Finance Bill.

Deposit Purchase Plan

Last December, the previous Government announced their intention of stopping a new avoidance device concerned with the purchase of deposits of money in a way that gets round last year's legislation on the exploitation of certificates of deposit. I propose to carry this intention through and the Finance Bill will contain the necessary provisions.

Capital Gains Tax—Depreciatory Transactions

My attention has also been drawn to a defect in the existing capital gains tax provisions dealing with depreciatory transactions within groups of companies. This defect will be put right with effect from today.

The Lump

The avoidance of tax is by no means a prerogative of the wealthy alone. It is rightly resented wherever it takes place. I shall therefore be proposing some measures relating to the so-called lump in the building industry. Their purpose is to tighten up the operation of the existing tax deduction scheme until we can bring in more substantial measures.

I believe that the series of measures for reducing tax avoidance which I have just described will be heartily welcomed


by the overwhelming majority of citizens at all income levels who regularly pay the full tax due on their incomes. In the long run, effective measures against tax avoidance may enable us so to enlarge the base on which tax is levied that increases in the rates of tax may be unnecessary. Meanwhile, I hope that what I have already proposed will make it easier for those concerned to carry the additional burdens I must now describe.

DIRECT TAXATION: COMPANIES, ETC.

Company Taxation

Companies have in general been doing rather better in the last year or two and profits last year reached a very high level. There was, in fact, a significant increase in the share of total national income going to companies. In these circumstances, it is only right that companies should bear their share of the cost of putting the economy back on course.

I propose, therefore, first, that the corporation tax rate for the financial year 1973 should be 52 per cent., a little above the rate of 50 per cent. which, I think, has been generally expected; and, secondly, that companies should be asked somewhat to accelerate the payment of a proportion of the corporation tax for the next year. This acceleration will work on the following lines. As from 1st April, when they pay their advance corporation tax on distributions, they will have to make an additional payment of a half of that sum. This extra amount will then be set off against their corporation tax liability on their profits for their accounting years ending in 1974–75. I propose that small companies shall be charged at a rate of 42 per cent. Building societies, co-operative societies and housing associations will remain chargeable at their present rate of 40 per cent.

I must deal here also with the rate of tax on gains accruing to companies. The law now provides for a fraction only of capital gains to be included in a company's taxable profits, so that the effective rate on gains is less than the rate applied to income. I propose that this effective rate for the financial year 1973 shall be 30 per cent. I propose also to

continue for the financial year 1973 the effective corporation tax rate of 15 per cent. on gains going to investment and unit trusts to match the credit given last year on gains made on a sale by unit-holders.

Oil and Gas

The oil companies present a special problem so far as their profits are concerned, and particularly as to the question of how to ensure that profits from North Sea oil bear their proper weight of corporation tax. My predecessor announced in his Budget last year that he proposed to follow the recommendations of the 1973 report of the Public Accounts Committee and introduce legislation this year. This legislation would enable administered prices to be prescribed for oil for United Kingdom tax purposes and would ensure that oil companies' accumulated losses could not be set again profits of the Continental Shelf. On a later occasion it was stated that the Conservative Government had decided not to meet another point made by the Public Accounts Committee in relation to group relief for capital allowances on investment unconnected with the North Sea.

It is clear that there will have to be legislation affecting, among other things, the tax treatment of oil company losses and the computation of their profits for tax purposes. However, though I do not necessarily reject my predecessor's approach, I am, of course, not bound by it, and I shall want to consider this matter as a whole in the context of the Government's proposals to ensure that the public derive an adequate share of the very large profits flowing from the Continental Shelf and to remedy existing shortcomings in the tax treatment of oil companies. These are major issues requiring more than three weeks' consideration.

I shall, therefore, not be bringing forward proposals on this matter in this Budget, but when I do I will ensure, as was intended by the right hon. Member for Altrincham and Sale, that the Exchequer does not suffer from the delay, and my proposals will deal comprehensively both with the accumulated losses up to 31st December 1972 and with liabilities accruing from 1st January 1973 onwards.

Stamp Duty

I also propose generally to double the existing 1 per cent. duty on conveyances and transfers, certain analogous duties, and the duty of duplicates. In the case of conveyances of property other than shares and securities, etc., that is, most private houses, I propose, however, to increase the exemption level from the present figure of £10,000 to £15,000. The rate will then increase in steps of ½ per cent. for each successive £5,000 until the new full rate of 2 per cent. is reached on transfers exceeding £30,000. The new rates will generally take effect from 1st May and will yield £75 million in 1974–75. There will be no change in the other stamp duties—for example, that on policies of life assurance.

Interest on tax

I now turn to a minor but important aspect of tax administration. I share the view, which has been gathering force in recent years, that a taxpayer is entitled to some compensation by way of interest when repayments of income tax due to him are unduly delayed through no fault of his own. The administrative difficulties are very great. Nevertheless, the second Finance Bill will include provision for a necessarily simplified scheme of compensation when tax repayments to individuals are delayed in circumstances of this kind beyond 5th April in the year following the year of assessment. There will also be provision for payment of interest on overpayments of estate duty and the new tax on gratuitous transfers of capital. Conversely, the Bill will also include new measures to encourage the prompt payment of tax due to the Exchequer.

DIRECT TAXATION: PERSONAL

General

I now turn to the other changes I propose in personal taxation. In preparing these, I have been very conscious that the proposals I have already announced in the field of indirect taxation will bear on people at all income levels, though consumers of less essential items will make a larger contribution. With indirect taxation, however, there is necessarily only limited scope for putting the burden on those best able to bear it. But when we

come to direct taxation, there is much less difficulty, and I have been concerned to ensure that my changes will, on the one hand, give some relief to the poorest, and, on the other hand, will place the heaviest burdens on the broadest backs.

Personal allowances and reliefs

First, the good news. One of the worst consequences of inflation has been to force more and more of the worse off into paying higher tax, because their money incomes have increased although their real earnings have risen very much less. To relieve those at the bottom of the scale, I therefore propose to increase the main tax allowances and so to put up the threshold for income tax. The personal allowance for single people will go up by £30 and that for married couples by £90. I am proposing a substantially higher increase in the married allowance because this has in recent years been falling behind in comparison with the single allowance.

I also propose to increase the income tax child allowance. This is the only way open to me of giving early help to the great majority of families, since it is not administratively possible to introduce family allowances, or some form of child credit, for the first child in the immediate future. The increase for child allowances will be £40 at each of the three rates.

The total cost of these changes in allowances will be £513 million in 1974–75—£654 million in a full year. The number of taxpayers relieved from income tax in the coming year as a result of these changes in tax allowances will be 1½ million, including earning wives.

I propose to give further help to the worse off in relation to age exemption. Successive Governments have increased the age exemption limit to take account of increases in national insurance retirement pensions, to avoid a pensioner being brought into tax liability simply by reason of the pension increase. I propose to follow this practice, and the increases in age exemption income limits required as a result of my right hon. Friend's proposals on the pension front will be fairly substantial: the age exemption income limit for a single person will be increased by £85, from £700 to £785, and for married couples by £130, from £1,000 to £1,130. The marginal fraction, by which the relief is withdrawn when a pensioner's


income slightly exceeds these limits, will have to be increased slightly in order to avoid an unreasonably wide marginal band. It will go up from 50 per cent. to 55 per cent. The cost of these changes will be £18 million in 1974–75—£30 million in a full year.

Now the news which some may find less agreeable, the raising of the tax threshold, the cost of the improved pensions and other benefits falling on the Exchequer and the actions we are taking on food subsidies and housing, make it inevitable that I should increase the revenue from tax on incomes.

Surtax

I will deal first with the proposal made by my predecessor last December for a surcharge on surtax for 1972–73. The arrangements for imposing this surcharge were already in train when we came to power, and I propose to carry out my predecessor's intentions, with one exception. This is the exemption for the elderly. We see no justification for excusing the wealthy man from payment of the surcharge simply because he has stopped working, or indeed when he is still earning vast sums, because he is over 65. It will therefore apply on the lines announced by my predecessor, but to all taxpayers irrespective of their age.

Structure of the Rate Scheme

My next proposal is for a change in the structure of the rate schedule. At present we have a very wide basic rate hand of £5,000 taxable income, and the rate of tax then jumps by 10 per cent. to the next band of liability. After this point the successive bands of liability increase by 5 per cent. steps. I propose to reduce the width of the basic rate band, and at the same time to make the progression more smooth by introducing a new band below the first of the higher rate bands. This band of income will be taxed at a rate 5 percentage points above the basic rate and will be £500 wide. In other words, it will start at £4,500 taxable income. This change by itself will bring in £12 million additional revenue in a full year.

A second structural change relates to the investment income surcharge. At present, the rate of this is 15 per cent.

and it is levied on investment incomes above £2,000. We made it clear when we were in opposition that we thought this starting point unjustifiably high, and I now propose to reduce this to £1,000 investment income. The rate of surcharge on the slice of income from £1,000 to £2,000 will be 10 per cent. The starting point for the elderly—that is, people over 65—will, however, be £1,500; and they will pay surcharge at the rate of 10 per cent. on the slice of income from £1,500 to £2,000. This change will bring in about £40 million in a full year.

Disallowance of Non-Business Interest

Before coming to the rates of income tax, I must refer to one other proposal—which will not be unexpected. In 1969 my right hon. Friend who is now Home Secretary took measures to curb excessive personal borrowing by withdrawing the tax relief on interest for private borrowings except for specified purposes. These measures were cancelled by the right hon. Member for Altrincham and Sale in 1972. We have never wavered in our belief that my right hon. Friend's legislation was right, and I believe that the experience of the past two years has proved our case to the hilt. It is obvious nonsense for the Exchequer to subsidise inessential borrowing at any time, let alone in the current state of the economy. In the past two years, it has been a factor in the excessive growth of the money supply. I therefore propose to include in the Finance Bill provisions broadly reintroducing the 1969 legislation, but with two material differences.

The first relates to tax relief on mortgage interest paid by owner-occupiers. At the present moment, when there is a universal shortage of housing for ordinary families, there can be no justification for giving tax subsidies for the provision of luxury houses or second homes. I propose, therefore, that in future an owner-occupier will be entitled to relief only for a loan to acquire or improve his principal place of residence, and the relief will be limited to the interest on a mortgage up to £25,000. This is a generous limit indeed, some may think it over-generous—but on practical grounds we need a single limit for the whole country and one that can reasonably be expected to stand for some time.

The other difference from the 1969 legislation relates to interest on overdrafts. In 1969, relief was allowed on overdraft interest so far as it related to qualifying purposes. This was an easy condition to take advantage of, and I propose, therefore, that this time there should be no relief for interest on overdraft facilities. If a loan is to qualify for relief, it must be tied to a particular qualifying purpose.

The new conditions for relief will apply to all loans taken out after today. Interest on existing loans will continue to qualify for relief as at present for a period of six years, with the exception of overdraft interest. This will qualify for relief up to the end of 1974–75. I estimate the tax yield from these proposals at £20 million in 1974–75 and £100 million in a full year.

Income Tax Rates

Finally, I turn to the rates of income tax. As I have already made clear, I require to raise from the taxpayer a substantial amount of additional revenue for the coming year. In order to bring in the necessary sum, I propose to increase the basic rate of income tax by 3p in the pound. This increase in the basic rate will have two consequences. The first is an increase in the rate of Advance Corporation Tax, which will be adjusted to keep in step. The second will be a change in the family allowance deduction, more commonly known as claw-back. This is necessary or the amount recovered through tax would be greater than the addition to family allowances to which the deduction relates.

The higher rates of income tax—and that includes the intermediate band 5 per cent above the basic rate which I have just announced—will also be increased by 3p in the pound, with the exception of the highest rate of all. This rate, at present 75 per cent., will be increased to 83 per cent., that is, there will be an increase of 5 percentage points over and above the general 3 per cent. increase. The result of this will be that for the biggest investment incomes the rate of tax will be significantly higher than in 1970–71. It will become 98 per cent., that is a top rate of 83 per cent. plus 15 per cent. investment income surcharge.

The higher tax deductions will take effect from the week beginning 4th May. This is the earliest date by which the new tax tables can be printed and distributed

to employers. I recognise that this unavoidable lapse of time before the new tax rates can be brought into effect will mean that employees will have to face heavier PAYE deductions in the first week of the new rates, since the tax for that week will include the back tax due at the new rates from the beginning of the income tax year. But this effect will be cushioned by the increases in the single and married allowances which will also take effect at that time. The result will be that extra tax will be paid that week only by people earning more than £17–75 per week if single or £34 if married. Below these points the level of tax deduction will in fact drop.

It will take rather longer for tax offices to make the PAYE coding changes needed to give effect to the increased child allowances. These will come into operation generally in the week starting 20th July. I estimate that the changes in the rates of income tax which I am proposing will yield £778 million in 1974–75 and £954 million in a full year.

The composite rate charged for building societies in the coming year will as usual be determined by the changes taking place in the rates of tax and the taxable income of their depositors. Taken by itself, however, an increase in the basic rate of income tax tends to result in a smaller increase in the composite rate. Second, the building societies will benefit from their exemption from the general increase in the rate of corporation tax and from the ending of the tax advantage on guaranteed income bonds. I recognise that all this falls short of a solution to the problems which the building societies now face, but I hope that the House will welcome it at least as a step in the right direction.

CONCLUSION

I can now sum up the effect of my proposals. Leaving aside the increase in pensions, which is largely matched by higher contributions in the normal way, and the rise in nationalised industry prices, which is needed to offset the higher costs of the industries, the net increase in expenditure which I have announced amounts to a little under £700 million in 1974–75. The increase in taxation is, however, nearly £1,400 million, that is,


twice as much. Thus the effect of my proposals is to reduce the public sector borrowing requirement by £700 million and to bring it down to a little over £2,700 million this year. I have thus achieved the target I set myself—a reduction of £1,500 million on the figure of over £4,250 million for 1973–74.

In terms of demand for resources, I expect my proposals to have a mildly restraining effect so that by the end of the year demand may be running at about £200 million lower than would otherwise have been the case. As this is a little less than one third of 1 per cent. of the likely GDP at that time, these Budget proposals are thus broadly neutral. I estimate that on this basis output in the final quarter of this year will have recovered to a level some 2½ per cent. higher than a year earlier. This should secure a rate of growth which will let us take full advantage of our export opportunities and foster the confidence necessary for industrial investment.

In social terms, my proposals will involve a significant redistribution of income. For a married man with two children under 11, the tax threshold is raised from about £21·50 a week to nearly £25 a week. If he is on £30 a week, his net take-home pay will rise by about 85p a week. Indeed, up to £54 a week, which is well above average earnings, all married men with two children will find that the burden of their income tax and national insurance contributions will be reduced to some extent. On the other hand, a man in similar circumstances earning £200 a week will pay nearly £4 a week more tax, and a man earning £1,000 a week with £10,000 investment income will pay just over £74 a week more.

In terms of retail prices, the action we are taking on food subsidies will lower the index by about 1½ per cent., and this will largely offset the increases in the excise duties and the changes in VAT. More important, however, than the net result is the fact that we shall be reducing the cost of the necessities of life, such as basic foods and rents, and finding the money by increasing the cost of things which are less essential and which, to a large extent, people can do without altogether if they choose. This transfer will bring great benefits to the housewife and to all who have to struggle to make

ends meet. Together with the redistribution carried out by the changes in direct taxation, it sets Britain on a new course towards that just and fair society which in the long run is the only basis on which to build the national unity we need.

Yet though the burden is now more fairly shared, burden it is. In one way or another my Budget calls on the majority of the British people to make some sacrifice for the survival of their way of life. Few, I am confident, will reject that call. We in Britain have always taken pride in our ability to face reality when we are told the truth.

Britain today is face to face with a crisis which is no less challenging because it has come on us slowly—almost imperceptibly—over the years. A fundamental change of course is long overdue. I believe that the action which the Government have taken in the past few weeks can mark the turning point in our people's post-war history. A new spirit of confidence and co-operation is already abroad. I ask the House to accept the proposals in this Budget as a further step along the road to realism and a united nation.

Mr. Deputy Speaker: Perhaps at this point I may remind the House of the procedures to be followed. Under Standing Orders, the first motion entitled, "Provisional Collection of Taxes" must be decided without debate. When that matter has been disposed of, I shall call on the Chancellor to move the motion entitled, "Amendment of the Law" and it is on that motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the debate on Monday.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

(a) Spirits (customs and excise) (motion No. 2).
(b) Beer (customs and excise) (motion No. 3).
(c) Wine (customs) (motion No. 4).
(d) British wine (excise) (motion No. 5).
(e) Tobacco (customs and excise) (motion No. 6).
(f) General betting duty (excise) (motion No. 7).


(g) Pool betting duty (excise) (motion No. 8).
(h) Value added tax (time of supply) (motion No. 10).—[Mr. Healey.]

put forthwith, pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

AMENDMENT OF THE LAW

Motion made, and Question proposed.
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for any relief other than relief applicable to goods of whatever description or services of whatever description.—[Mr. Healey.]

5.52 p.m.

Mr. Edward Heath: It is my pleasant task on behalf of the whole House to offer sincere congratulations to the Chancellor of the Exchequer on the manner of the presentation of his Budget. Such protestations are customary at the beginning of the speech of the Leader of the Opposition, but I assure the Chancellor that for a considerable number of reasons the congratulations of the House on this occasion are particularly sincere.
First, we should like to congratulate him on the way he has overcome what must be a considerable physical ordeal. The Chancellor sat down two hours and 20 minutes, I think, after rising to present his Budget statement. Such duration makes a considerable demand on any Minister of the Crown in presenting a statement to the House.
I suggest that the Chancellor need not show undue modesty, as he tended to do at the beginning of his speech. Surely what he delivered must be one of the most complicated and wide-ranging Budget statements of modern times, as well as one of extraordinary length, and we congratulate him on the clarity and lucidity with which he has woven his way through the labyrinthine maze of his Budget statement.
During the course of his exposition his own benches began to empty, but he should not take umbrage from that. It was not, I feel, due to the manner of the presentation of his statement. Whether it was something to do with the content of his statement is not for me to say. We admire him for the way he presented his Budget.
It seemed to some of us that some of the remarks in the opening part of the Chancellor's speech were somewhat contentious for a Budget statement. However, I do not wish to dwell on that today. There will be other opportunities to deal with the arguments which he put forward about the miners and the cost of buying industrial peace.
We ought to congratulate the Chancellor on being able to produce a Budget Statement at all. To me it seemed that the three weeks of the General Elzetion campaign was a long time, but he indicated that the three weeks taken to prepare his statement was a short time. I can well understand his feelings.
My right hon. Friend the Member for Altrincham and Sale (Mr. Barber)—the former Chancellor of the Exchequer—left some measures prepared which the right hon. Gentleman has accepted and has embodied in his Finance Bill, but neither he or his colleagues have had any previous experience at the Treasury, and so the achievement to which we have listened today is all the more remarkable. Therefore, I reiterate the warm congratulations of the House to the Chancellor.
So much for the manner of the presentation of the Budget. I now propose to say something about the matters with which the Chancelllor has been concerned. We shall want to examine these with great care, particularly as today's Budget was one of the most complicated and wide-ranging Budget Statements of modern times. It would be unfair to the Chancellor, to the Government and to the House to attempt immediate judgment on many of the matters with which he dealt. Careful study is needed in order to comprehend in detail what the Chancellor has outlined.
I sometimes wonder whether it is a happy custom that the Leader of the Opposition is expected to reply at length after hearing a long speech from the Chancellor, such as that today, of two


hours and 20 minutes duration. Perhaps I should return to an earlier custom and comment on certain major matters and leave my right hon. and hon. Friends who will be wishing to take part in the debate to deal in more detail with some of the other points.
At the beginning of his speech the Chancellor of the Exchequer set out what he said was a brief summary of the economy. However, I suggest to him that there were certain oversimplifications in his analysis which could be misleading. When he was dealing with the general level of inflation it was an omission not to analyse what was due to domestic inflation and what was due to imported inflation. We do ourselves and the country less than justice if we look at the total problem without breaking it up into these two categories.
In talking about the deficit on the balance of payments, he omitted, although saying that there was an overall problem of £2,000 million on oil, to break up the recent figures for the balance of payments into what was due to the increased amount paid for oil and what was due to the non-oil deficit.
The Chancellor also spoke about the need to use all our resources in the economy, and to waste none of them. I profoundly agree with this. We tried to achieve success on this point with the trade unions and the employers. If one takes that position one has to acknowledge—the Chancellor will come across this in the coming year—the problem of that part of the balance of payments deficit which is due to growth. The Chancellor said that the underlying growth rate of the country has not changed recently. I do not entirely accept that. I agree that it has not changed sufficiently, because the capacity has not been there. Until we are able to achieve capacity in our industrial system we shall never get the underlying growth rate pushed up. This is a problem which successive Governments have faced since 1945. The right hon. Gentleman's predecessor in office in the last Labour Government encountered it, and the right hon. Gentleman will encounter it and have to try to find a solution if we are to have an increase in the underlying growth rate.
The Chancellor has agreed to keep the competitive credit system introduced by his predecessor. In this he has overruled the Prime Minister, who strongly objected to it. We do not object to it in the least, and we are glad that the Chancellor will look at any difficulties which may emerge in the competitive credit system.
What is the Chancellor's real dilemma? It is that a considerable amount of deflationary pressure is already at work in the economic system. There is, first, the extra tax yield which will go to the Treasury because of the increase in incomes. There is the rise in oil prices of about £2,000 million a year, which is either a tax on the consumers or a demand on industry. My right hon. Friend the previous Chancellor of the Exchequer took out £1,200 million for the coming year, which was announced last December.
Prices and profits are being squeezed by price controls, or, in some cases, by demand which is now becoming stagnant at home. We have heard the protestations of the motor industry about this. So this is already a powerful element in the economy. The question is, how great an effect will it have and when will it be necessary to counteract this powerful deflationary element which is already in the economy? This is where the balance of judgment comes in.
If demand begins to fall and prices and profits are being squeezed, we shall undoubtedly see unemployment rising. There was a significant omission from the Chancellor's statement today. He gave us no guidance on what he expects to happen to the employment picture for the rest of the year. It may be that he or his colleagues can help us on that matter later in the debate. If the right hon. Gentleman is to avoid increased unemployment later in the year, reflation may be needed to deal with the situation, but if he reflates he is faced with the dilemma that inflation may continue to rise.
That is where the question of a soundly-based incomes policy becomes preeminent. The Chancellor's immediate predecessor in the last Labour Government—the right hon. Member for Birmingham, Stechford (Mr. Jenkins)—of whom the right hon. Gentleman has been critical, found that that was happening


and that he was unable to deal with the situation because he no longer had an incomes policy of any kind. Therefore, it is vital that in the dilemma which the Chancellor faces he should insist on an effective incomes policy. The only alternative is to find that the deflation in the system is. causing unemployment, and that will be counter to the right hon. Gentleman's first principle of using all our resources.
No one should under-estimate the difficulty of dealing with that sort of situation or of analysing it, or of prescribing solutions for it once an analysis has been made—least of all those of us on the Opposition side of the House who had to deal with those problems over a momentous period of nearly four years. We would never under-estimate the difficulty of the timing of action of that kind.
I think that the Chancellor was, in a way, trying to pre-empt what I am saying by announcing that he proposed to have a second Budget. Perhaps it is time every right hon. and hon. Member stopped pulling the leg of successive Chancellors if, at different times of the year, they propose to take action to alter the course of the economy. I hope that I am not being unduly charitable in making such a suggestion. We are all of us, on both sides of the House, accustomed to this procedure. Perhaps now, as the right hon. Gentleman announced deliberately that he will have a further Budget and that it will give him the opportunity of making further adjustments, we may accept the difficulty of keeping the economy working with a reasonable momentum and accept that, particularly in the uncertain state of the world today, Chancellors will have to adjust from time to time and that it is right that they should do so.
The Chancellor commented, somewhat to the disadvantage of the previous Government, on how long it takes for specific action to work through the economy. That will be just as true of what is going on now, with the £1,200 million reduction in public expenditure of my right Hon. Friend the Member for Altrincham and Sale, as of the effects the Chancellor is creating by the measures he announced in his Budget speech. The test of everything the Chancellor said is how much it is designed to deal with the nation's economic problems and how

much it is designed to deal with the Labour Party's problems and political obsessions. I want to look at the matter from that point of view.
During the past three weeks we have had many announcements of benefits which the present Government wish to bring to the people of this country, or at least—let me put it as fairly as I can —announcements of measures which they believe to be benefits. There have been the social service benefits, which are very expensive, as we all know—£1,240 million in a full year—and subsidies of various kinds. There are the food subsidies, now costing £500 million a year, and rents are being frozen at a cost of about £70 million.
On social services benefits the right hon. Gentleman used a rather interesting phrase. He said that having raised money from employers and employees, the insurance fund would be in sufficient funds to deal with those benefits. To my rather suspicious mind that means not only that the Government will pay 18 per cent. but that they will draw on what is now a surplus in the fund. Should not the Chancellor have told us so, if that is the case? Has he allowed for that in his demand management figures? It seems to me to be quite a considerable sum of about £220 million that he may be taking out of the insurance fund. That, in social services benefits, will be pure demand, as we know from experience. Has the right hon. Gentleman taken that into his calculations?
Now we come to the food subsidies, on which the Chancellor has said he proposes to spend £500 million, plus what was allowed for, which I think was £50 million. On my calculations, milk alone will cost £310 million, an enormous subsidy, compared to our arrangements for limited subsidies. Most people who have had to deal with food subsidies have always looked to a position in which they can gradually ease them out, because of the distortions which they obviously cause, but the Chancellor is deliberately increasing the subsidy substantially on one item of food—not just holding the price but deliberately putting it down—so getting further and deeper into the whole question of indiscriminate food subsidies. I ask myself whether it was a wise step in the circumstances. It also indicates that the subsidies which were


more or less promised on all the other foodstuffs will not be available, because if the Chancellor sticks to his figure the money will not be there.
I come now to the Budget judgment. The right hon. Gentleman says that it is broadly neutral, perhaps slightly deflationary. What was interesting to us was to see whose advice he had taken. His right hon. Friend the present Foreign and Commonwealth Secretary went, for the purposes of tuition, to the Oxford school. Most people in the House and the country agree that the consequences of that tuition were not particularly happy or profitable either for the right hon. Gentleman or for the country. We understand that the present Chancellor has gone to the Cambridge school. We understand that some of the advice—from Dr. Kaldor, for instance—was solidly deflationary. Some was deflationary three months ago and is inflationary now, with both points of view expressed in letters to The Times. The Chancellor has done the obvious thing and decided to go neutral over the whole affair.
We must look at the right hon. Gentleman's figures carefully when we have a chance. Some of us remember his period as Secretary of State for Defence. That taught us that we had to look at all his figures very carefully. The right hon. Gentleman may have thought it appropriate to treat the Treasury in that way when he was at the Defence Department. What is not appropriate is for him as Chancellor to treat us as he previously treated the Treasury. We shall look at all his figures.
What are the effects of the Budget and the Chancellor's Budget judgment on inflation? He said that a man earning up to £54 a week will not be paying more in income tax or social security contributions. But he then jumped to the man earning £200 a week. Of course, in our industrial society today a considerable number of skilled workers earn £54 a week upwards. They are the people who will have to pay the additional income tax the Chancellor has imposed.

Mr. William Hamilton: Where are they?

An Hon. Member: The printers.

Mr. Heath: It only shows how out of touch the hon. Member for Fife, Central (Mr. Hamilton) is, if he does not know.

Mr. William Hamilton: Will the right hon. Gentleman tell us exactly where these men are?

Mr. Heath: One of my hon. Friends shouted to the hon. Gentleman, "The printers". They form rather an obvious example. Such men are also to be found in the engineering industry and the motor industry. There are many in the construction industry, and now there are those mining at the coal face. They are the people who will be paying the extra income tax imposed by the Chancellor.
The other point is that, whether they earn up to £54 or above, people will be paying additional indirect taxation. That was a significant figure which the right hon. Gentleman omitted from his statement. He told us what would be the effect of the food subsidies and then added the effect of the increases in indirect taxation. He did not tell us what the total effect of that plus the increase in nationalised industry prices would be.
The subsidy problem is one which we faced as well. The Chancellor is increasing food subsidies, with the milk subsidy alone going up to £310 million. He argues that it is a necessity of life and that the subsidy is needed to help people, but at the same time he is putting up the price of other necessities, such as electricity, which people must have, coal, which they must have, transport, which they must use, and Post Office services, which they must use. That is the contradiction into which the right hon. Gentleman has got himself to a serious degree. The figure we should like to know is the total impact on the retail price index of the food subsidies, plus the additional indirect taxation, plus the nationalised industry costs. What will be the impact on stage 3 and on the threshold? That is the figure that matters.
The rent freeze has been cited. That will put up the rates and the RPI. What makes the situation more difficult is that although the direct taxation provision is limited to £54 a week and above, that is a considerable sector. There are included in it many of those who are in the most powerful unions. At the same time, we must consider the impact on the RPI of


the right hon. Gentleman's measures. When we analyse the position the people will find out the cost of this Government.
It was interesting that the right hon. Gentleman said nothing about helping the individual house owner in any way. That is of great importance in the present situation. It seems extraordinary, the right hon. Gentleman having covered such a wide area, that that matter should have been omitted. I accept that the right hon. Gentleman dealt with second homes, but he said nothing about those with five homes.
We must consider the impact of the right hon. Gentleman's measures on the balance of payments. Little was said about it, apart from a limitation being placed on overseas investment. No doubt we shall hear more about that when the time comes. What will be the effect on investment at home? The right hon. Gentleman said that he wanted more investment. I do not see how anything which he has done will bring about more investment.
The right hon. Gentleman is again knocking companies. He has put up corporation tax and he demands advance payments of corporation tax from companies before companies have earned the profits with which they will pay corporation tax. How does he imagine that that will encourage more investment? Perhaps I have misunderstood what he said. In any case, he has put up corporation tax and is squeezing profits more.
It is not correct to say that there was a great increase in profits in 1973. It is necessary to take stock appreciation into account, which gives a firm nothing which it can spend and nothing with which it can invest. All that has happened is that stock has gone up on valuation and that it will have to be replaced at that valuation or at a higher price. When that matter is taken into account, profits in 1973 did not increase.
That has been the problem besetting British industry for the past 15 years. British industry has not enjoyed sufficient profitability. We went to great lengths to try to ensure that reasonable profitability could be obtained. I believe that the Chancellor has damaged that profitability. That factor is essential if we are to have an expansion of the economy.
I am not in dispute with the right hon. Gentleman when he talks about a united

nation and the need to improve the real standard of living. However, I believe that we cannot get a united nation and solve our social problems unless there is an expanding economy from which people can benefit. That is the only way in which it can be done. In my political life many other ways have been tried. I have now come firmly to the conclusion that there is no other way of trying to solve social problems except by a reasonable increase in total output which can be shared amongst the people.
Of course, the Chancellor is entitled to bring forward measures of egalitarianism to please his own party. I do not share his view that what he describes as the poor performance of British industry over the past 50 years is due to accretions of wealth. Let him argue the case for equality and egalitarianism on whatever basis he likes, but he is deceiving himself and everybody else if he believes that a lack of growth in the economy is due to such accretions of wealth as there may be in our society.
What does he think will be the wage pattern for the rest of the year'? When he was announcing different dates for the implementation of nationalised industry price increases, some of my right hon. and hon. Friends were watching the pattern which was emerging. The right hon. Gentleman said that it was to be November for coal. At that my right hon. and hon. Friends, with their political and suspicious minds, were thinking, "That means October." When the right hon. Gentleman came to July for electricity, my right hon. and hon. Friends thought, "That means June". When the right hon. Gentleman dealt with Post Office charges and said that they were to be dealt with straight away, my right hon. and hon. Friends thought, "It seems that it will be within the next three weeks". Of course, we cannot tell what will happen in the next three weeks.
I do not think that the Chancellor would like to lose this massive Finance Bill, which must now be ready, or the second Budget which he wants to introduce. It seems that he was doing that juggling whilst having in mind to do something with the threshold for stage 3 and the next stage of the incomes policy, without having a clue as to what that policy will be. That is why he is juggling with those dates.
Let him tell us clearly what will be the wages pattern for the rest of the year. He made no mention of the rate of growth for the rest of the year. Will he let wages rise and then tax them further? Will he try to get a reasonable arrangement either statutorily or voluntarily so that the pattern of wage increases is commensurate with growth?
I am glad that the right hon. Gentleman has accepted our main proposal for dealing with offsetting losses. [Interruption.] Oh, I regret that he does not accept it. It was a very good arrangement, and very necessary.
The right hon. Gentleman dealt with the proper sharing of North Sea oil profits. We have gone into that matter in great detail. It is necessary to clear it up as early as possible. It is clear that there are two major options. There can be carried interest in various forms. We believe that that should be introduced only for existing licences. A Government can do what they like with future licences. The other option is an excess revenue tax. However, there is uncertainty about the nationalisation of North Sea oil. I ask the right hon. Gentleman to clear up that matter as soon as possible.

The Paymaster-General (Mr. Edmund Dell): Was the right hon. Gentleman negotiating with the oil companies for a carried interest on existing licences?

Mr. Heath: Not as far as I know. I think that if there is to he an arrangement it should be a voluntary arrangement which the oil companies can accept or reject. If some of them prefer to go for such an arrangement, that will be up to them. The Government can stipulate what they like regarding future licences.
We shall await a statement from the Secretary of State for Defence. The dismay on the faces of the right hon. Gentleman's hon. Friends on the back benches when he announced only a £50 million cut in defence expenditure was there for everyone to see. It gave us a certain satisfaction that the right hon. Gentleman limited himself to a cut of that size. I do not have much sympathy for the argument that since other countries are not doing what they should do, so we should not, either. Fundamentally,

it is our job to see that the Atlantic Alliance is effective.
What does the Budget amount to? Of course, we accept the blocking of tax loopholes of one kind or another, but within the Budget there are the usual pieces of petty spite. One example is employee participation, about which we have heard so much from the right hon. Gentleman and his colleagues. One practical example of Government help towards employee participation is the own-as-you-save scheme. The Chancellor is discouraging that scheme and putting it out of court. That I regard as purely doctrinal. It is unworthy of the right hon. Gentleman and I hope that he will reconsider the matter.
Once again we have a Labour Government who are running true to form. We see all the tax increases to which we are accustomed. We see an increase in income tax equivalent to the old 6d, which puts income tax back to where it was when the previous Labour Government left office. We see an increase in indirect taxation—on beer, spirits and tobacco. We see it on items which were taken out of VAT and which will now be subject to tax. It is exactly the same pattern which we have always had from a Labour Government—namely, increased taxation on companies and individuals.
The right hon. Gentleman, having promised so much, has found that he cannot raise the money from the rich. The amount which he is raising from them is really minimal. The great burden is being carried by the great mass of the people. That is the position in which he now finds himself. Since he has made promises and offered benefits, the whole country must now pay.
I find it depressing that there is nothing in the Budget which will encourage industry and those working in industry or which will encourage exports or change the balance of the export pattern. That is one of the principles to which the right hon. Gentleman has referred in the past. I find it particularly depressing that the attempt has been abandoned to try to create a modern efficient and effective economy which could produce the benefits which the people want.
I know how much pleasure it gives to get rid of this project, that project and the other project. We now know that


the examination of Maplin is a sham. What will happen to Concorde? There may be a breach of a treaty. The right hon. Gentleman's predecessor tried that when he was Minister of Aviation and he failed. There is no real attempt to evaluate these matters in the national interest.
The right hon. Gentleman has decided to go for the usual Socialist policies of increasing taxation, of squeezing the profits, of giving no additional opportunities or incentives to those who work in industry or to those who produce the goods or to those responsible for our exports. The right hon. Gentleman may think that by producing so many benefits he is achieving great short-term popularity. He may have done it, but while he was speaking it did not seem that he was producing even that popularity with his own party, and certainly he will not do so with the country. I must tell him that in the longer term I do not believe that he has in any way risen to the needs of the occasion in his proposals.

6.21 p.m.

Mr. John Horam: I give a warm welcome to my right hon. Friend the Chancellor of the Exchequer's Budget. I say that the more strongly because, as he will remember, I put to him criticism of the sort of Budget which I felt was being urged upon him by some of the more deflationary commentators. They attributed to my right hon. Friend deflationary views which, I am glad to see, are totally belied by his performance today.
I speak as someone with a certain bias as a member of the expansionist element of the Cambridge school. Most of us who follow these economic and financial matters with interest will have read the correspondence in The Times between various commentators and experts. They said, first, that there should be an element of deflation and, secondly, and more lately, that there should be an element of expansion. The two views were quite consistent. The right hon. Member for Altrincham and Sale (Mr. Barber) deflated the economy to some extent in his December mini-Budget, and it is, therefore, consistent that those who urged a certain amount of deflation before Christmas should now be urging a certain amount of inflation, or, at least, no

deflation. I am glad that my right hon. Friend has produced a Budget which I can warmly welcome in these terms. The Budget is mildly deflationary, but extremely mildly. In fact, the reversal effect is about £200 million—almost neither here nor there and well within the usual statistical margin of error.
I am glad that my right hon. Friend will present another Budget later this year. I have always thought that the long marathon Budget, presented at a time of year not always the best chosen to give a broad and correct view of the economy, was a mistake and that we ought to have a more ongoing monitoring arrangement, a chance to look again at the economy during the year. I am glad, therefore, that my right hon. Friend has reached this logical conclusion. He goes further than any previous Chancellor has gone in that respect and has adopted a modern-minded approach.
My right hon. Friend's approach is broadly right in terms of his Budget judgment. The world as a whole faces the possibility of many economies simultaneously entering a period of recession or at least of less than the fast growth they have been used to in past years, particularly last year. In such circumstances, it is important that we should not add our mite to the total amount of recession and deflation in the world. This should become apparent later in the year, and for these reasons my right hon. Friend has chosen the right path.
Secondly, I welcome the Budget on the ground that my right hon. Friend strongly argued, that it is a redistribution Budget which is trying to make our society more equal. That must be the basis for action, not only in terms of human affairs and a more reasonable society but in terms of efficiency as well.. The right hon. Member for Sidcup (Mr. Heath) has said that it is basically all about efficiency, but I do not believe that efficiency can be achieved without a certain effort to make society less unequal and less unfair. I do not believe that these two aims are contradictory. Indeed, they go hand in hand.
The confrontation, unease, anxiety and loss of production we have seen over the last few months as a result of the effort to concentrate solely on efficiency is proof of the argument that efficiency


and a fairer society go together in forming the right basis for a modern economy. This entails a degree of equality which is broadly acceptable to the mass of the population, and I believe that the mass of our people think that our society is more unequal than it should be. With this Budget they will think that it is now becoming more equal and that the Government on the whole have taken steps along the right path.
I welcome my hon. Friend's statements about food subsidies and that he has kept to the Labour Party's commitment regarding the general level of the subsidies expected—about £500 million in the financial year. I reject the point made by the Leader of the Opposition that all this will be going on to milk. My right hon. Friend pointed out that the details have not yet been worked out, and we know from what my right hon. Friend the Secretary of State for Prices and Consumer Protection has said that this is a difficult and complicated matter that cannot be worked out in three weeks. My right hon. Friend added that the Government are committing themselves to a broadly-based attempt to hold down prices of various basic commodities but that they cannot entirely foretell what will happen to individual prices; the Government will, however, do their best to distribute the £500 million in a way which will help the consumer best. This approach by the Government is sensible, and by no means commits them to the sort of strange, open-ended policies which the Leader of the Opposition claimed were inevitable from what the Chancellor said. Quite the contrary.
Thirdly, we all welcome, whatever our party affiliations, the increase in pension to £10 for a single person and £16 for a married couple. This, again, was a Labour Party election commitment. I also welcome the skilful way in which my right hon. Friend is paying for it. As my hon. Friend the Chief Secretary to the Treasury is aware, I advocate the idea of abolishing national insurance contributions—at least, for employees—altogether, raising the equivalent amount through ordinary income tax. I am sorry that my right hon. Friend has not made that change, but I did not really expect that he would. My right hon. Friend's decision, carried out rather subtly, to

avoid placing the largest burden on those with the lowest incomes is an example of his approach. He is scaling the increased contributions very skilfully.
In order to pay for the undoubted advantages which we are to get by increased pensions, food subsidies and more housing, my right hon. Friend has also been extremely skilful, except in one respect. The cut of only £50 million in defence expenditure has disappointed many of us on this side of the House, although it will have heartened some hon. Members opposite. It seems a tiny amount compared with the sort of defence cuts to which the Labour Party is traditionally and rightly committed. I do not think that arguments about relative degrees of selfishness hold much water. A modern society should not be committed as much as we are to defence expenditure when one looks at all the other claims on our money. I was proud of the reduction in defence expenditure achieved by the last Labour Government, who brought it below the level of spending on education, and I would like to see that happening again. But £50 million is but a derisory advance towards that objective.
I welcome the reference to Concorde, which should long ago have been got rid of. It has never been the type of project in which we should have invested so much money. I have always been equally opposed to the Maplin project, although less opposed to the Channel Tunnel project. I welcome my right hon. Friend's statements on these matters. I hope that the Government will protect the employment prospects of the people of Bristol and that the rundown of Concorde is done in a sensible and humane way. The Concorde is the wrong sort of investment for the United Kingdom at this time.
The other main element in the Budget, apart from expenditure cuts, is the increase in income tax. Again I thought my right hon. Friend's Budget Statement extremely skilful, and that he is being egalitarian in his approach. Everyone earning less than £54 a week is better off than he was before the Budget. That is a Socialist Budget and a sensible, fair approach towards raising the money needed for higher pensions and subsidies.
The Leader of the Opposition said that the burden would fall upon those earning


more than £54 a week. That is so, but little extra will fall on those earning from £64 to £74 a week. The increases imposed upon people in that category, which may include some better paid manual workers, will not be large. Certainly in my constituency—and this probably applies the more as one goes north—there will be very few people earning as much as £54 a week. The broad mass of the electors will be earning below that level. It will not hurt the ordinary person, the man in the back street. He will be better off as a result of the Budget.
I welcome my right hon. Friend's commitment to wealth and capital taxes. I recognise that they cannot be introduced at once. There must obviously be discussion and further talks. Plainly, proposals were not in a shape which would allow legislation at this stage. I urge upon my right hon. Friends an early consideration of additional taxation to deal with property gains, whether in terms of a land value tax, which the Liberals espouse, or in terms of a tax on unrealised gains, which my hon. Friends and I were thinking of before the election. The latter method is to be preferred.
This is not a spiteful Budget, as the Leader of the Opposition suggested. That suggestion comes from the leader of the party whose manifesto spoke about taking away benefits from the wives and families of strikers. That is spiteful. The things proposed here are by no means spiteful in comparison. It is, broadly, a Budget which achieves the right fair-minded approach to a modern society, an approach which can be a basis for true efficiency. It is a Budget which I feel sure will receive the general and warm approval of my hon. Friends.

6.32 p.m.

Mr. John Wakeham: I am grateful to you, Mr. Speaker, for being called upon what is one of the most important days in the parliamentary year. I listened to the hon. Member for Gateshead, West (Mr. Horam) with perhaps less attention than I would on other occasions because in my mind there was the possibility that I would be able to catch your eye. None the less, I listened to his speech as much as I was able.
Since this is my first opportunity to address the House I wish to pay tribute to my predecessor, Mr. Brian Harrison, who served in this House for nearly 20 years and who has a fine record of public service to his constituents and to this House. He will in particular be remembered for his great efforts in encouraging better relations with the Commonwealth and for his interest in Community matters. I know that he will be continuing this work outside the House and I feel sure that his many friends inside and outside the House will want to join me in wishing him all success and happiness in his new activities.
In a way I have two predecessors—Brian Harrison for the northern part of my constituency and my hon. Friend the Member for Essex, South-East (Sir Bernard Braine) for the southern half. As my hon. Friend is very much with us in this House it would be impertinent of me to say anything about him except that on occasions I shall be giving him support in his proposals for stopping the development of Maplin—an issue of great concern to our constituents. I hope that the Government will reach a speedy conclusion on this project.
My constituency is at once unique and typical. It is unique in that it is the only constituency in the country in which it is impossible to cross from the northern to the southern part without either getting one's feet wet or going through two other constituencies. My constituency is divided from east to west by the River Crouch. We have no bridge across that river throughout the length and breadth of the constituency.
It is typical of many other constituencies in that at first sight it appears to be a mainly agricultural constituency. Farming is certainly an important industry there. We have some of the finest farmers in the country. There is also a considerable amount of light industry and a large number of commuters travel daily into Liverpool Street.
The principal town in the north of my constituency is Maldon which remembers very well the visit of Her Majesty in 1971 when we celebrated the 800th anniversary of the granting of our Charter in 1171. The principal town in the south is Rochford, which has also Royal associations in that it was the home of Anne Boleyn for the greater


part of her childhood. Most hon. Members know what happened to her.
In Maldon we have the sort of problems that are to be expected. The vast majority of my constituents are not represented by the trade unions. The CBI does not consult them frequently on day-to-day problems. To a large extent they rely on their own efforts to improve their standard of living and upon the Government to see that they get a fair deal.
This is my first speech and I gather that the convention is that I should be noncontroversial in what I have to say. As we have just had a Budget Statement and no doubt everyone is busy thinking of the finer implications I want to make two suggestions, neither of which is particularly controversial in a political sense which I think will be of help to my constituents. By profession I am a practising chartered accountant. My suggestions, if adopted, will not enhance the income of myself or my fellow practising accountants. Indeed, I hope that they will substantially reduce it over the years.
I refer to the issue of tax simplification. I hope that the Chancellor will continue the work of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) who made such great steps in reforming the tax system during the past two years. Urgent steps must be taken to reform our system of personal taxation. I would like to see us reach the point when a reasonably educated man would be able, without a great deal of difficulty, to work out his personal tax liability using a simple system of self-assessment. There is nothing particularly difficult or complicated about this. It is done in many parts of the world.
It requires a new set of forms and greater use of computers. It also requires —and here there may be additional work for my profession—a comprehensive system of auditing assessments. The corollary is that there should also be higher penalties for those who evade paying taxes. There is certainly room for improvement in our system of collecting personal taxation.
Secondly, I remind the Chancellor that in framing his new tax legislation his principle responsibility is to ensure that the 999 honest people who wish to discharge their liabilities are able to do so

easily and efficiently. I agree that he has also to frame his legislation in such a way that the few people who are dishonest are caught by the system. There is a danger that the Inland Revenue, in its natural desire to close loopholes in the tax system, is tempted to make the legislation so complicated that ordinary people find it difficult to know—and professional advisers find it difficult to advise them—exactly where they stand with the legislation. We shall obviously have some more complicated legislation to put into effect the proposals that have been made today.
I welcome the proposal to publish a wealth tax Green Paper. That will enable hon. Members and professional people to have the opportunity of making comments and suggestions on the machinery of the tax.
The Chancellor's main responsibility is to try to ease the lot of the vast majority of people who want to discharge their liabilities, however onerous. I hope, therefore, that the work on tax reform and improving our system of tax collection will continue under this Government as it did under the previous administration.

6.41 p.m.

Mr. Douglas Henderson: My first pleasant duty is to express the House's congratulations to the hon. Member for Maldon (Mr. Wake-ham) on his maiden speech. He confessed to being a chartered accountant by profession, but I am sure that we shall not hold that against him in his subsequent career in the House. He combined his accounting skills with the fluency of a skilled advocate. He was clear, lucid and informative. At times I felt that he could be persuasive. He spoke with great confidence, and we look forward to hearing from him on many occasions.
While I am in an agreeable mood I ask the Chancellor's colleagues to convey to him my appreciation of his performance This is the first occasion on which I have been present on Budget day. The Chancellor's speech was highly polished and sustained everyone's interest until the end. We may have our own views on certain matters contained in the statement, but the Chancellor is to be congratulated on the way he presented his proposals.
The Scottish National Party welcomes the proposed improvements in social benefits, particularly the higher benefits for pensioners. I hope that that proposal will meet with universal approval and acceptance. The proposal to restrain prices by the introduction of food subsidies will also be generally welcomed, but tempered by the bleak news of increases in the price of commodities that pensioners will have to buy. There are to be increases in the prices of coal, electricity and postal rates, and I understand that increased telephone charges are to come. All those increases, combined with the rate of inflation, which the Chancellor saw little prospect of reducing. will, alas, rapidly wipe out most of the benefits which the Chancellor proposes for pensioners.

Mr. Michael Latham: Does the hon. Gentleman agree that, in addition to the matters he has mentioned, the 80 per cent. increase in rates which is proposed for my constituents will also bear heavily on many people?

Mr. Henderson: I am grateful to the hon. Gentleman for his comment. It allows me to omit a little of what I was about to say.
I am sorry that there has been so little appreciation of people's difficulty with mortgages. We in Scotland are particularly interested in this. Building societies in the past have taken far more out of Scotland by way of invested income than they have lent. I hope that the Chancellor will make sure that the increased appetite for private ownership of housing in Scotland is not undermined by the practice followed by English building societies.
The Chancellor said that the economy and the balance of payments deficit presented a sombre picture. I agree that the situation is serious, bearing in mind the deterioration in the balance of payments position, the growth in money supply and the trade deficit at the beginning of this year. The Chancellor referred to Britain's unique economic difficulties. In that context I am interested in his reference to oil being the means of solving all the problems within the next four years.
At the risk of being repetitive, I must reiterate what has been said in the past few days: do not depend on that oil

because it is Scotland's oil. My hon. Friends and I are here to get our own Government in Scotland, which will have control of our oil resources. If the United Kingdom is looking to oil for its salvation, it may be seriously disappointed. I wonder whether the massive loan which the Chancellor has obtained from overseas has been obtained on the security of Scotland's oil. If so, that security cannot be regarded as cast-iron for the future.
We in Scotland—and I think it is also true of Wales—are particularly affected by any tax which increases the cost of the transport of goods. The increase in the cost of petrol will put an added burden on consumers in Scotland. It is a tax on distance. I have received irate letters from constituents complaining that English companies which supply to every corner of England have a separate tariff for Scotland and charge an extra 10 per cent. to cover increased transport cost. We do not welcome an increased tax on oil, because it is a tax on distance.
That is true also of telecommunications. Telephone calls made from Scotland to places outside Scotland are almost all at the higher rate. The increase in rail fares and freight charges may have a serious effect on the Scottish economy. We are told that the price of gas is not to be increased, but Scottish consumers already pay between 33½ and 50 per cent. more than do consumers in the regions in England. It is said that it is England's gas, and we are certainly made to pay through the nose for it.
I ask the Chancellor to bear in mind the effect on the whisky industry of the additional burden it will have to bear. There is an imbalance in the taxation on whisky and beer. Hon Members may not be aware of the extent to which whisky rather than beer is drunk in Scotland. It is a sad blow to the working men in Scotland that the tax on whisky should have been increased so much, and we shall watch carefully to see whether it has an effect on the demand for whisky.
I welcome the Chancellor's comments on the prestige projects of Concorde, Maplin airport and the Channel Tunnel. These projects are of little benefit to Scotland's economy, and drain resources


from our economy to benefit already affluent areas. The Scottish taxpayers have paid millions of pounds towards the cost of Concorde, and I doubt whether we have received anything back in terms of wages or dividends. For Scotland it is money down the drain. I hope that the Chancellor's remarks foreshadow an early announcement that the project will be scrapped once for all before any more money is wasted on it.
My final point relates to cut-backs in public expenditure in Scotland. The Scottish economy has been seriously hampered by cut-backs in public expenditure announced last December and still in force. We have major projects with which we should like to proceed. Therefore, I would have liked to have had from the Chancellor of the Exchequer reassuring news that in Scotland—particularly in the north-east where local authorities are being expected to do so much to provide new infrastructure for oil and related developments—there would be some substantial relaxations to allow authorities to go ahead with their projects. We welcome many of the social provisions in this respect. We feel that in an independent Scotland we could do much better, and that is the message for the people of Scotland.

6.51 p.m.

Mr. Giles Radice: I shall not take up the arguments deployed by the hon. Member for Aberdeenshire, East (Mr. Douglas Henderson), except to say that I was surprised, on occasions when he was not talking exclusively about Scotland, to hear him warmly welcome most of the Budget, because I feel that that will be the reaction of most people in the United Kingdom. I warmly welcome the Budget introduced by my right hon. Friend the Chancellor of the Exchequer. I congratulate him in producing, in three weeks, a Budget which normally take six months to produce. In that short period of time my right hon. Friend has produced a major Budget which in a number of ways is revolutionary, and he and his ministerial colleagues must be congratulated on the work which they have put in.
I am delighted with the economic effect of the Budget, which, broadly, is neutral. Some of us were slightly worried at the

advice which the Chancellor of the Exchequer was receiving since we felt that it was too deflationary, and we are delighted that he has not taken that advice. I emphasise that he has produced a Budget that is broadly neutral in its economic effects and I can only say, speaking as a trade unionist and as a Member of Parliament for a North-West constituency, that I am delighted with it.
From the point of view of social justice my right hon. Friend's Budget represents a decisive commitment to the kind of society that Labour Members would like to see. I can well imagine the distaste and chagrin of some Conservatives when they heard some of the things said by my right hon. Friend, but that convinced me that he was on the right lines in introducing his proposals.
The right hon. Gentleman the Leader of the Opposition made no mention of the depressing inheritance which my right hon. Friend took over and against which he had to present his proposals. The right hon. Gentleman did not mention the massive balance of payments deficit, which is of disastrous proportions, or the fact that we now have the highest rate of inflation since the war. He did not mention the failure of the Conservative Government's dash for growth and the fact that by the end of the year the growth rate had slowed down almost to a stop. He did not mention the effect of the three-day week or of the miners' strike. We heard nothing about those important matters. The right hon. Gentleman made no mention of the fact that the Labour Government came to power at a time when the country was more divided than it had been for many years. He did not mention that handouts to the better off had created a situation in which people felt that our society was unfair and that this was at a time when the provisions of the Housing Finance Act were forcing up rents.
The Conservative Government refused to do anything about food prices, and merely sought to lay the whole problem at the door of world prices, saying that nothing could be done about the situation. I am pleased that my right hon. Friend rejected that approach and said that the most important thing was to aim at a society governed by the principles of social justice.
I welcome three main advances made by my right hon. Friend, and I know that all Labour Members will join me in my praise for those proposals. I refer to the increase in pensions, the move to subsidise some main items of food, and the commitment on housing. We have already had a freeze on council house rents. We now have a commitment to begin to improve the rate of housebuilding—a process that was so disastrously slowed down under the Tory Government.
This is the framework in which we shall hope to create once again a more united society, and it is right that this should be Labour's approach. We also welcome the redistribution of income and wealth begun by my right hon. Friend's Budget and also the fact that he has taken away some of the handouts given by the former Conservative Chancellor of the Exchequer, the right hon. Member for Altrincham and Sale (Mr. Barber.) I do not believe that the present Chancellor of the Exchequer has gone far enough in dealing with property speculation. Furthermore, I understand that in terms of a wealth tax he will have to produce a Green Paper, but I think it can be said that he is on the right lines in what he has set out to achieve. We welcome what he is endeavouring to do.
We are grateful that my right hon. Friend has not dug a hole in the economy. He has not created unemployment, or any danger of it, at a time when the world economy is not likely to expand. I am delighted that he will have a second bite of the cherry, in the form of a second Budget. We must get away from the idea of an annual Budget, which is an old-fashioned institution. My right hon. Friend is right to tackle the two main objectives that he set himself—first, to reduce the rate of inflation and the massive Budget deficit that he inherited, and, secondly, to subsidise the main food items. He is also right to try to tackle some of the problems involved in the balance of payments deficit. I agree with him that this cannot all be done at once.
The fact that my right hon. Friend has managed to negotiate a long-term loan shows the confidence of overseas bankers in Britain and indeed in the new Labour Government. It must be pointed out that the Conservative Government did not obtain such a loan. I believe that this

shows that the Labour Government will last and that my right hon. Friend's Budget is on the right lines.
I am delighted that my right hon. Friend has not got rid of the regional employment premium. I am particularly pleased about this as a regional Member of Parliament for the North-East, and I know that everybody in that area will also be delighted.
I regard the Budget as fair-minded. I believe that it will be welcomed by the mass of the people, and certainly by the mass of my constituents, most of whom are not paid above £50 a week—whatever the Leader of the Opposition may think in his fastnesses. The broad mass of the people will benefit from the Budget. It cuts right across the social background. I believe that we can now begin to tackle some of the major problems that face us.
Debate adjourned.—[Mr. Dormand.]

Debate to be resumed tomorrow.

ASHDOWN FOREST BILL (By Order)

Order for Second Reading read.

Mr. Speaker: Before calling the hon. Member for East Grinstead (Mr. Johnson Smith) to move the Second Reading of the Bill, I have to inform the House that I have not selected the amendment in the name of the hon. Member for Tiverton (Mr. Maxwell-Hyslop), which I have no doubt is in accordance with his expectations.

7.0 p.m.

Mr. Geoffrey Johnson Smith: I beg to move, That the Bill be now read a Second time.
In accordance with custom and procedure, I must declare an interest. The whole forest lies in my constituency, and I am sorry to say that, that being the case, I am precluded from taking part in the Committee proceedings which will follow later this year should the House give the Bill a Second Reading.
On 4th July 1973, the House approved the Second Reading of a similar Bill promoted by the East Sussex County Council. This is a new House of Commons, with many new Members. I hope that hon. Members will agree that it is only courteous for their benefit to state


the objectives of the Bill and the reasons for it, to describe its main provisions and to say a few words about those clauses in respect of which people still have doubts and criticisms.
The thinking that provides the basis of the Bill comes from the report of the conservators which took two years to prepare. It was the basis of many discussions between the county council and the board of conservators. The report was published in July 1972, and consultations subsequently took place with other bodies, including the Countryside Commission and the Commons, Open Spaces and Footpaths Preservation Society, which, together with the Friends of Ashdown Forest, the Council for the Protection of Rural England and the Sussex Trust for Nature Conservation, fully support the Bill.
The forest covers about 6,400 acres and its soil is vested in the lord of the manor, the Lord Buckhurst, who also supports the Bill.
The existing legislation and arrangements for administering the forest were considered by those who prepared the report to be inadequate and out of date. What the promoters seek to do—I cannot emphasise this point too strongly—is to ensure that the forest is protected as a quiet and natural area of outstanding beauty. To judge from the many conversations which I have had on the subject and the correspondence which I have received, that is the unanimous view of critics and proponents alike.
With the mounting pressure on open space in the already overcrowded South-East and the increasing use of the county for leisure pursuits, an area such as Ashdown Forest must have proper management supported by strong financial backing if it is to survive in its natural state.
It is argued both by the conservators —some of whom are elected by the commoners and give their services free—and by the county council that if they do not make the necessary changes to provide the protection which is wanted there is a real danger, as the years go by and the pressures mount, of the forest's being exploited for unsuitable and organised activities which may be desirable in some other parts of the countryside but which are totally inappropriate here and unwan-

ted by the local inhabitants in general and the commoners in particular. I hope that hon. Members on both sides of the House will agree that this is not a selfish attitude for my constituents to take.
There is a desperate shortage of unspoiled natural countryside that can be enjoyed within a reasonable distance of London and the south coast by those seeking quietude and natural peace. That is why the Bill sets out in Clause 16—to which the most controversial clauses are subservient—the duties of the conservators, the managing body of the forest, in the following manner:
It shall be the duty of the Conservators subject to the provisions of this Act at all times as far as possible to regulate and manage the forest so as to protect the existing rights of common upon the forest, to protect the forest from encroachments, and to conserve it as a quiet and natural area of outstanding beauty.
Nothing could be clearer than that.
It is worth noting that for the benefit of those who have enjoyed 750 years of rights of common for the first time the protection of existing rights of common is a duty imposed on the conservators. Clause 16 imposes duties, and the remainder of the Bill enables those duties to be performed.
As the promoters of the Bill see it, the problem is that there is no specific provision for many of the supervisory and other functions which the conservators are obliged to carry out in the course of their day-to-day administration of the forest. The existing legislation never envisaged and therefore was never designed to cover the greatly increased use of the forest by members of the public at large. The conservators argue that they now run the risk of exercising powers which are not lawfully vested in them.
I turn now to the problem of financing the administration of the forest, which is one of the gut problems facing the conservators. Financially, the cost of administering and protecting the forest has risen to such an extent, as anyone reading the report can see, that it is no longer feasible to expect the commoners, by means of the present rate, to meet more than a small proportion of the required income. It is especially unfair to expect to do so in these days when only a few commoners exercise their rights of common which are grazing and the collection of wood and bracken.
The existing arrangements of financial contribution of the local authorities is no longer working properly. In recent years the Ucktield Rural District Council, in whose area the forest wholly lies, has limited its contribution to £1,500, and two other councils to £250 and £200 per annum. Both the latter councils, with their small contributions, will on 1st April merge into the new district council in West Sussex. The main burden of local authority support has therefore fallen upon and been met by the East Sussex County Council.
The report recommended—and the Bill gives effect to the recommendation—that all the local authorities in East Sussex should be relieved of their discretionary financial liabilities and that responsibility for the board's excess of expenditure over income in any one year should be the statutory liability of the East Sussex County Council.
Without the guarantee of financial support, the county council believes that the conservators will find it very difficult to administer the forest properly and will have to rely on voluntary support and the rate paid by the commoners. This inevitably raises in some people's minds the question whether the forest should be taken over and turned into a country park, where the rights of common would he extinguished. What is more, in a country park activities might be allowed which were inconsistent with Clause 16—the quiet and natural beauty clause.
If the Bill fails, I hope that hon. Members and those outside this House will realise that there will be financial insecurity, with no immediate prospect of solution, and that something will have to be done quickly about financing the forest.
As the Bill stands, the county council will have to pay the largest part of the cost of running the forest. Not unnaturally, it argues that it should have an overall majority of representatives on the board of conservators. These representatives can either be elected councillors or people appointed for their special knowledge.
Finance is all-important, therefore. Expenses rise year by year. At the moment expenditure is running at about £13,000 per annum. The more people

come, the greater the risk of fire and the need for litter control, as well as the protection of the flora and fauna, and the improvement in grazing. All that costs money.
At present, the 6,400 acres of the forest are run by a full-time clerk, one secretary and just two rangers, who are all responsible to the conservators and are elected and unpaid voluntary servants of the forest. Some people say that this whole operation can be run more cheaply. I hope that hon. Members will agree that the preservation of the forest and the carrying out of these arduous duties are too important to be neglected.
The question of finance leads me to a subject which was one of the reasons for the promotion of the Bill. Under the provisions of the Countryside Act 1968 the county council would be eligible for grant to defray the expenses of running Ashdown Forest, but in order to retain the independence of the conservators a clause was introduced into the original Bill to enable the grant to be paid direct to them. That clause was disallowed, on the advice, last year, of the Department of the Environment, in view of the provisions of what is now the Local Government Act 1974. The conservators can now receive a grant direct, provided that there is secured to the public a right of access over the entire forest. It is argued that such a right now exists. If so, it is not expressed in the legislation governing the forest.
The public are at present permitted general acres:;, but this is at the will of the lord of the manor, and the right of access of the public is limited in legislative terms, whatever the practice may be, to a few selected areas.
I think that is a confusing situation, which those who compiled the report—they had legal advice—believe should be clarified. This the Bill seeks to do, and thereby to ensure beyond any shadow of doubt that the conservators shall be eligible for grant.
Finally, I turn to the amendments made to the Bill and some of the more important reservations that certain people still have about it.
Clauses 7 and 8 provide for a new form of constitution which gives an


overall majority on the board of conservators to the county council. This is being objected to by certain of the commoners.
Clause 14 relates to the voting at meetings by commoners. The arrangements in the original Bill were strongly criticised in the House last year as being feudal and anachronistic. Hon. Members will be pleased that in its new form this clause, together with Schedule 1, introduces the respected parliamentary democratic tradition of one man, one vote, in the election of conservators, and that is accepted by the majority of commoners.
Clause 17, which allows the planting and felling of trees, has run into criticism because it is feared that it could lead to commercial exploitation of the forest. I assure the House that the promoters of the Bill will be glad to consider any form of amendment to meet that point. One that springs to my mind is to limit the planting of trees and shrubs in any one year to a total of 10 acres, with a maximum of one acre for each plantation.
The object of Clause 18 is not, as some might assume, to encourage the licensing of activities totally inconsistent with Clause 16 which, I remind the House, is the overriding clause in the Bill, but, on the contrary, to introduce control of activities which are acceptable provided that they are within reasonable limits.
Clause 20, which allows the conservators to buy or sell land, is thought by some critics still to be too widely drawn. The forest, however, to those who know it well, is a strange place. It is not tidily laid out, with convenient boundaries. There are enclaves within it which do not form part of it. The power in Clause 20 is needed to enable appropriate boundary adjustments to be made or for enclaves, which are not part of but are beneficial to the forest, to be bought. Of course, consent for that must be sought from the county council and the Secretary of State.
Clause 20 would also seem to some, to take a ludicrous example, to enable the lord of the manor to purchase land in, say, the centre of Manchester in exchange for land in the forest for the use of speculators. That is how it has

been put in conversations that I have had with some of my constituents.
These are important matters of drafting which the promoters are fully aware may be thought to require attention. Certainly some of the points that I have mentioned require attention, although I recognise that there is already an important protection in the Bill; that any one commoner has only to object to any of these proposals—the buying and selling of land, and so on—to require the holding of an inquiry by the Secretary of State.
I am concerned that all my constituents, be they commoners, local residents or councillors, should have every opportunity of making their views known and having their suggestions and amendments properly discussed and considered. There will be plenty of time.
Some people have complained that there has been undue haste in the promotion of the Bill. There were many discussions during the progress of the last Bill, which spent five days before a Select Committee of this House and was passed with only minor amendments. It has also been through the House of Lords. If, as I hope, the Bill goes before a Select Committee again, I understand that the promoters have undertaken not to seek a date for the Select Committee to consider it until the beginning of June. That will provide plenty of time for further discussions and consideration of additional amendments, and time also for the new county council, which will assume responsibility for the Bill on 1st April, to consider closely its provisions as well as to study the views of those who either object to its provisions or have specific amendments to make.
I welcome the opportunity for further discussions and I shall do all that I can to bring about a meeting of minds of all those who share the basic desire to protect the forest for all time in its natural state against the pressures of modern urban life.

7.13 p.m.

Mr. R. J. Maxwell-Hyslop: I think that I have some objectives in common with my hon. Friend the Member for East Grinstead (Mr. Johnson Smith) in wishing to see a resolution of the disagreements between the promoters


of and the objectors to the Bill. However, there are some points that I should like to put to my hon. Friend.
The first concerns an important point of principle, and I should be grateful if my hon. Friend would give it sympathetic consideration. It is not an equal contest when a Bill is in Committee, because, on the one hand, there are the promoters, who have the apparently bottomless purse of their ratepayers from which to pay lawyers to plead their case, and, on the other hand, there are the objectors, the commoners of the Ashdown Forest, of very slender financial resources and not in a position to hire expensive lawyers to carry their case through the protracted sittings of a Private Bill Committee.
I felt it desirable that the various parties should meet to try to reach agreement before the Bill was introduced so that there could, in effect, be an agreed Bill going through the processes of the House. Incidentally, that would save a lot of ratepayers' money, as well as the slender resources of the commoners.
The Bill failed to get through the House during the last Session and here I must refer to the intransigence of the promoters. It was not until the Bill died at the end of the last Session that they amended the procedure to one man, one vote.

Mrs. Lena Jeger: What about providing for one woman, one vote? I understand that the Bill makes no provision for women to have voting rights.

Mr. Maxwell-Hyslop: The point made by the hon. Lady is not facetious, but of substance. What the hon. Lady is referring to is a situation in which a common holding is shared by two people, one of each sex: the man is entitled to vote, but the woman is not. Perhaps I may return to this later, because it is a point of substance and not a trivial matter about women's lib or otherwise.
The promoters of the Bill cease to exist on Sunday night, and the new council takes over from then. It was my hope that during the time that Parliament was dissolved—and to that extent there was an unexpected hiatus during which progress could have been made—the objectors would be able to meet not

just the existing promoters, who will cease to exist on Sunday night, but those who will take over the promotion of the Bill, including its handling in Committee.
The parliamentary agent acting for the promoters of the Bill did his best to bring about such a meeting. However, it did not take place, and the reason for that which most concerns me is that the promoters who are to take over the Bill on Monday refused to meet the objectors to the measure except as observers. I now propose to read the relevant paragraph of a letter sent on instruction from his principals by the parliamentary agent to the vice-chairman of the commoners committee.
The Writer states:
I am instructed to reiterate that neither the Chairman of the new County Council nor the Chief Executive considered it appropriate for them to be present at a meeting to discuss the details of points arising on the Commoners' opposition to the Bill which is promoted by the old County Council and has been the subject of proceedings before both Houses of Parliament in a previous session.
It is proper for those officers who have handled the Bill from the outset to be introducing any amendments to it. The new County Secretary will however be present at the meeting as an observer and will be in a position to pass to the new County Council the views which are expressed by those attending.
The objectors took the reasonable view that there was not much point in having a meeting to deal with possible alterations to the Bill with an authority which would cease to exist before such alterations could be made. On the other hand, the new promoting authority, which would handle the Bill in Committee if it were given a Second Reading, refused to attend such a meeting except as observers. Thus, the efforts both of myself and of the parliamentary agent to bring about a meeting in the hope that the questions at issue between the objectors and the promoters could be resolved came to nought, once again because of the intrasigence of the promoters. It is only right, when two parties are completely unequal in terms of their financial resources, that, where possible, the items at issue before them should not be resolved by the prohibitively expensive Private Bill Committee system, but rather by civilised meetings outside the House before the Bill is introduced.
I should now like to read some important communications that I have received from responsible bodies interested in this


matter. The first is a letter dated 8th December 1973 from the Clerk of the Rural District Council of Uckfield. Incidentally, by 18th December the old Bill had died. As my hon. Friend said in introducing this measure and recommending it to the House, the only difference of any substance was the inclusion of the one man, one vote provision, but that was not the issue upon which the Rural District Council of Uckfield was opposed to it.
So that I shall not mislead the House, it is necessary for me to read the letter written by the clerk of the district council rather than paraphrase it. He says:

"Dear Mr. Maxwell-Hyslop,

I hope you will not regard it as presumptuous of me to write to you but having read Hansard on the debate that took place in the House on 23rd August I much appreciate your interest in this Bill. References have been made to the Uckfield Council and their attitude towards the Bill, some of which are misleading and for your information I would like to put the record straight.

The Uckfield Council have always maintained that there has been no necessity for fresh legislation. Under the existing Ashdown Forest Act, 1937 the Local Authorities have representation on the Conservators and complete control over their finances by virtue of the Local Authorities making a voluntary contribution to the expenditure.

When the Bill was first introduced before Parliament in November, 1972, it was pointed out that none of the reasons put forward by the County Council for promoting fresh legislation could be justified. The County Council argued:

(a) That they had to have financial control. As I have already explained, means of financial control already exist and indeed it would always be possible to reduce the basis of the voluntary contributions to an Agreement by the exchange of correspondence if there should ever be a need for the financial position to be clarified in any way.
(b) The County Council stated that they required the public to have access to the Forest. The public have never had their right of access denied but in any event if it were necessary to clarify the position adequate legislation exists in the Law of Property Act, 1925 for the Lord of the Manor to make a declaration to this effect.
(c) The County Council claim that the legislation should enable grant to be paid from the Countryside Commission, but here again adequate provision exists in the Countryside Act and, as you will know, the Clause in the Bill to this effect was deleted."

Mr. Johnson Smith: I explained that.

Mr. Maxwell-Hyslop: I am reading out the letter, rather than commenting on it.
It goes on:
In our early negotiations with the County Council, we emphasised that the Uckfield Council saw no purpose in incurring the expense of fresh legislation and we did stress to them at that time the necessity to consult the Commoners but for whose existence Ashdown Forest would not now exist. But the County Council, very unwisely in my view, virtually ignored the Commoners and they certainly paid no attention to the suggestions we made regarding the voting process whereby the Commoners elected their representatives to serve on the Board of Conservators.
As you will be fully aware, this particular issue has been the subject of some considerable anxiety by the Commoners who apart from this are concerned with certain clauses which might be used to the detriment of the Forest by its development in some form.
As you well know, the carry-over motion before the House failed as did the Bill before Parliament was prorogued.
The County Council stated that they would consult the Commoners for their views regarding any new Bill but all they have done is to ask the Conservators to seek the views of the Commoners which is, of course, of considerable difference.
The County Council have recently decided to introduce a fresh Ashdown Forest Bill in the form of the filled-up Bill as it came before the House at the Third Reading amended only to provide for the voting of the Commoners on the basis of one-man one-vote.
The Uckfield Council petitioned against the original Bill on the basis that it was unnecessary and undesirable but they were advised by Counsel that their arguments would not be attractive to Parliament and as we had secured much by negotiation, it was decided not to incur any further expenditure and to withdraw the Petition.
The County Council's decision to promote fresh legislation will come before my Council in the near future, when I anticipate that they will decide to take no further action in the matter, but my purpose in writing to you now is to emphasise that the Uckfield Council have never been convinced as to its necessity and are indeed apprehensive as to the possible dangers of some of the clauses in the distant future being used to the detriment of the Forest. If, therefore, it is stated in your presence that the Uckfield Council are in favour of the Bill, I should be grateful if you would correct any such statement. For your information, I enclose herewith a copy of a letter recently addressed to the Clerk of the East Sussex County Council, the promoting Authority, which specifically draws attention to this point.
The Uckfield Council subsequently passed a motion which endorsed the gravamen of what is in the clerk's letter. I received a telegram yesterday from the


Vice-Chairman of the Association of the Commoners telling me:
East Grinstead UDC Monday last rejected motion approve Ashdown Forest Bill and consequent Bill and consequent changes in their function by 10 votes to 6 1 abstention S0136A refers as with Uckfield stop 3 forest parish councils—Buxted, Danehill, Hartfield—also asks County withdrawal Bill.
So the existing second-tier authority in whose entirety the forest lies does not wish to see the Bill passed tonight. The three parish councils named do not want it passed tonight. More than 60 per cent. of the commoners have signed a petition that would mean, if it were granted, that the Bill would not be passed.
I am not one who says that no Bill will ever be needed on this matter. The gravamen of the case that I am putting to the House is that, because of the financial inequality among the various parties involved and because the promoting council ceases to exist on Sunday night and because the council taking over promotion of the Bill has refused to meet the objectors to discuss with them their objections before Second Reading, the just and prudent course would be for the House to refuse the Bill a Second Reading tonight. There will then be ample time, on an entirely clean and fresh basis, for the new county authority to meet the commoners and all the other parties to discuss the matter de novo.

Mr. Johnson Smith: I should not want my hon. Friend to mislead the House. The East Grinstead Urban District Council, which approved the Bill, a week ago had the debate which my hon. Friend mentioned when it rejected approval of the Bill. That is not the same thing. It is a very quick change of mind, but, leaving aside the reasons which led to this change of mind—I have spoken to some of the councillors concerned—it is misleading the House to suggest that they are opposed to the Bill. They were just rejecting approval of the Bill as it stands. I am not suggesting that the House should accept the Bill as it stands. I said that there were certain amendments which could be made to it. I am just asking for a Second Reading; that is all.

Mr. Maxwell-Hyslop: I read out the cable verbatim and, unless the statements in it are wrong—the House knows what was in that cable—I accepted it in good faith. My hon. Friend does not seem

to be seized of the point, with which I believe he may disagree, that the right place for agreement to be reached is before the Bill comes to the House at all, not to leave the objectors, many of whom are of no financial substance, in the impossible position of trying to fight promoters with the bottomless purse of the ratepayers' money—

Mr. Johnson Smith: No, not a bottomless purse.

Mr. Maxwell-Hyslop: Yes, a bottomless purse—and able to employ any counsel they like. The right thing to do, in their view, is to refuse the Bill a Second Reading tonight and to let the new county authority start again in good faith. The new county authority is not responsible for the drafting of the Bill.
A number of matters need to be looked at, not only Clauses 17, 18, 19 and 20. There is the question, for instance, of the composition of the conservators. Some may feel that this body should not be confined to the local county council, the new second-tier authority and the commoners, that perhaps some of the associations representing the interests of a wider public might also be represented. On the other hand, the existing promoters have declared that they are unwilling to entertain any amendment to the composition of the conservators as given in the Bill.
On that basis, I finish as I began by saying that the fair and reasonable thing for the House to do tonight is to ask the promoters to withdraw the Bill and, failing that, to decline to give it a Second Reading, so that the matters at issue may be temperately and reasonably discussed and, I hope, agreement on them reached, a new Bill drafted on the basis of those discussions and introduced into the House, where it might well be unopposed, thus saving everybody involved—the ratepayers and the objectors, but not the lawyers—the immense expense that will otherwise fall upon them. That is why I say that the Bill should not be read a Second time.

7.39 p.m.

Mr. Tim Rathbone: To some, in their maiden speeches, it is a duty to pay tribute to their predecessors in the House. For me it is the greatest pleasure. Sir Tufton Beamish represented the Lewes


constituency for almost 29 years. During that time he was a popular and serious Member of the House, as in recent years he has been and is still a conscientious member of the European Parliament. In spite of the acknowledged burden of this dual responsibility, he always worked hard for all of his constituents and was their much loved and much respected representative. He will be missed in Lewes, and I believe that he is missed here.
As it is a particularly long time since the House was reminded of the character of the Lewes constituency, I hope that I may be allowed to dwell on that for a few moments, as is customary. In this Parliament of minorities it is particularly a pleasure to do so, as it was at the Battle of Lewes that Simon de Montfort defeated Henry III and the first representative English Parliament was formed. It is also a particular pleasure to be speaking now after exactly 100 years of Conservative representation of the constituency of Lewes and at the start of what I hope may be the second century of such good sense among the electors of that constituency.
But the Lewes constituency is attractive for reasons other than electoral reasons. Through the constituency, from east to west, run the South Downs, no longer the virtually exclusive preserve of the sheep of that name, but still providing a geographical backbone to the farmers in the constituency. Through the Downs cut two rivers—the Cuckmere, which exits to the English Channel through the Seven Sisters Country Park and Bird sanctuary, and the Ouse, which runs the full length of the constituency, from Newick in the north, which is just three miles south of the Ashdown Forest, through to the thriving port of Newhaven in the south.
This port, under the usually benevolent eye of British Railways, enjoys the boom of increased trade and tourism with Europe, the growth of interest in sailing and boating in all its forms and, not least, the return to prosperity of the local fishing fleet, in which my hon. Friend the Member for Hastings (Mr. Warren), my hon. Friend the Member for Rye (Mr. Godman Irvine). my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), and my hon. Friend the Member

for Shoreham (Mr. Luce), as well as my predecessor, have shown such an interest.
To the west of Newhaven are the residential areas of Peacehaven, Telscombe Cliffs and East Saltdean, many of whose residents are retired and have been grateful for the actions of the previous Government in drawing proper attention to their needs and taking those actions to meet them which have been such an inspiration to the present Government.
To the east of Newhaven lies Seaford, for many years predominantly a retirement community but more recently attracting by its balmy sea breezes and attractive surroundings younger married couples, working there and to the east and west.
Coming inland through some of the prettiest villages, of Alfriston, Selmeston Firle and Berwick, to name but a few, there is the market town of Hailsham, which with Lewes can boast the most lively and prosperous cattle markets in the South-East. From Hailsham in the east to Plumpton and Ditchling in the west, there is no place in the length and breadth of the Kingdom in which one will find more beautiful countryside. May I extend a most open and cordial invitation to you, Mr. Deputy Speaker, and through you to all Members of the House, to visit me there?
I have dwelt long on the glories of the Lewes constituency, not only because they deserve to be honoured but because they provide the indispensable backdrop to the Bill that we are discussing tonight. In this small island of ours no one natural recreational amenity can be considered in a vacuum, separated from the others, most particularly from others contiguous to it. To this extent the Ashdown Forest is part not just of the Sussex amenity scene but of the amenity facilities of London and the whole of the southeastern part of England. The Seaford Head Nature Reserve, run by the Lewes District Council, the Ditchling Common Country Park, which is just being pieced together by the East Sussex County Council, and the Seven Sisters Country Park, already mentioned, are but three recreational facilities which fall, all or part, within my constituency and which all have a bearing on our attitude to the Ashdown Forest.
All these facilities are administered by local or county councils which are charged


with the conservation of the flora and fauna of these parks for the benefit of those who use them, from wherever they may come—and they do that very well. Ashdown Forest is of the same stature as these parks. Indeed, some may say that it is greater in stature than some of them. It is no longer a vulnerable local wood existing on borrowed time and with gifts of money. It is a feature of our countryside which is recreationally important, ecologically important and environmentally important. It is common land and, as such, it must be protected.
That, I believe, is the true object of the Bill. Indeed, following the speech of the Chancellor of the Exchequer earlier today, it is, I hope, not impertinent to say that the Bill has uniquely all the attributes which hon. Members on both sides of the House surely seek in any legislation. It is designed to provide for financial stability in a world in which financial stability is at a premium. It is designed to match representation with responsibility—a situation which is not always so, as everyone in the House knows. The Bill provides for more effective management and better control, yet at the same time establishing for the first time wider legal rights for the public use of the forest, be they men, women or children who use it. Over all of this it protects the existing rights of common upon the forest. The people of Sussex are proud to have been so often in the vanguard of planning for coast and countryside. I join my hon. Friend the Member for East Grinstead (Mr. Johnson Smith) and my hon. Friends who represent all the constituencies of Sussex, vast numbers of the commoners of Ashdown Forest, the majority of the Board of Conservators of Ashdown Forest and the overwhelming majority of opinion in Sussex, in supporting the Bill. I beg that it be given a Second Reading.

7.48 p.m.

Mr. Bryant Godman Irvine: I have been a Member of the House since 1955. I have sometimes wondered whether it would ever fall to my lot to

congratulate a maiden speaker on the excellence of the speech that he had delivered to us. I am delighted that I have saved this occasion for today, for three reasons.

The first is the quality of the speech which we have just heard and which delighted the House. We all greatly look forward to hearing a lot more from my hon. Friend the Member for Lewes (Mr. Rathbone). The second reason why it gives me great pleasure to offer my congratulations to my hon. Friend of his very felicitous speech is that he happens to be my Member of Parliament. The only complaint that I have is that tie aid not mention the village in which I live, which is the nicest village he represents. The third reason why I greatly welcome this opportunity is that, as a number of hon. Members may know, my hon. Friend has the unique distinction, probably, of both his parents having been Members of the House successively. Therefore, we have a very warm place in our hearts for him. We hope that he has a long and happy career with us in the House.

I want to say three things about Uckfield, to which my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) referred. First, Uckfield petitioned against the Bill in the House of Lords but withdrew its petition after its objections had been met. Secondly, Uckfield has not been outstanding in the financial contributions it has offered to make to Ashdown Forest. Thirdly, it is worth remembering that there is no suggestion now, and I certainly did not get any impression of it from the speech of my hon. Friend the Member for Tiverton, that Uckfield wanted to accept any financial responsibility for the maintenance of Ashdown Forest.

In these circumstances, it is my pleasure to support the motion for the Second Reading of the Bill.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 118, Noes 33.

Division No.4.]
AYES
[7.51 p.m.


Aitken, J. W. P.
Biffen, John
Burden, F. A.


Allason, James
Body, Richard
Butler, Adam (Bosworth)


Ancram, M.
Brown, Bob (Newcastle upon Tyne, W.)
Callaghan, Jim (M'dd'ton &amp; Pr'wich)


Atkins, Ronald
Brown, Sir Edward (Bath)
Clark, William (Croydon, S.)


Bagier, Gordon A. T.
Bruce-Gardyne, J.
Clegg, Walter


Baker, Kenneth
Buchanan-Smith, Alick
Cocks, Michael




Conlan, Bernard
Howell, Ralph (Norfolk, North)
Robertson, John (Paisley)


Cook, Robert F. (Edinburgh, C.)
Hughes, Roy (Newport)
Rodgers, George (Chorley)


Cooke, Robert (Bristol, W.)
Kellett-Bowman, Mrs. Elaine
Rost, Peter (Derbyshire, S.-E.)


Cope, John
Kershaw, Anthony
Sandelson, Neville


Costain, A. J.
Knight, Mrs. Jill
Shaw, Giles (Pudsey)


Crawshaw, Richard
Lamborn, Harry
Silkin, Hn. S. C. (S'hwark, Dulwich)


Dempsey, James
Lamont, Norman
Sinclair, Sir George


Drayson, Burnaby
Le Marchant, Spencer
Skeet, T. H. H.


du Cann, Rt. Hn. Edward
Lewis, Ron (Carlisle)
Smith, Dudley (W'wick&amp;L'm'ngton)


Durant, Tony
Loyden, Eddie
Snape, P. C.


Eadie, Alex
Luce, Richard
Spence, John


Edge, Geoff
Mayhew, P. (Royal T'bridge Wells)
Sproat, Iain


Elliott, R. W.
Mellish, Rt. Hn. Robert
Stanbrook, Ivor


Evans, Fred (Caerphilly)
Mitchell, David (Basingstoke)
Stanley, J. P.


Evans, Ioan (Aberdare)
Monro, Hector
Stodart, Rt. Hn. A. (Edinburgh, W.)


Evans, J. (Newton)
Moore, J. E. M. (Croydon, C.)
Stradling Thomas, John


Ewing, Harry (St'ling.F'kirk&amp;G'm'fh)
Morris, Charles R. (Openshaw)
Taylor, Robert (Croydon, N.W.)


Fairgrieve, Russell
Mudd, David
Tebbit, Norman


Fenner, Mrs. Peggy
Murray, Ronald King
Trotter, Neville


Fernyhough, Rt. Hn. E.
Neubert, Michael
Vaughan, Dr. Gerard


Fletcher, Alexander (Edinburgh, N.)
Newens, Stanley (Harlow)
Viggers, Peter


Fletcher. Ted (Darlington)
Newton, Tony (Braintree)
Walker, Terry (Kingswood)


Fookes. Miss Janet
Oakes, Gordon
Weatherill, Bernard


Ford, Ben
Orbach, Maurice
Winterton, Nicholas


Fowler, Norman (Sutton C'field)
Osborn, John
Wise, Mrs. Audrey


Fox, Marcus
Page, Rt. Hn. Graham (Crosby)
Woodall, Alec


Gourlay, Harry
Parkinson, Cecil (Hertfordshire, S.)
Woodhouse, Hn. Christopher


Grant, George (Morpeth)
Perry, Ernest G.
Wrigglesworth, Ian


Gray, Hamish
Pym, Rt. Hn. Francis
Young, David (Bolton, E.)


Hampson, Dr. Keith
Rathbone, Tim
Younger, Hn. George


Hannam, John
Rees, Peter (Dover &amp; Deal)



Harper, Joseph
Rees-Davies, W. R.
TELLERS FOR THE AYES:


Harrison, Col. Sir Harwood (Eye)
Renton, R. T. (Mid-Sussex)
Mr. Bryant Godman Irvine and


Hatton, Frank
Rhys Williams, Sir Brandon
Mr. Geoffrey Johnson Smith


Hawkins, Paul
Rifkind, Malcolm





NOES


Bates, Alf
Kilfedder, James A.
Stott, Roger


Cohen, Stanley
Kinnock, Neil
Tierney, Sydney


English, Michael
Lamond, James
Tyler, Paul


Faulds, Andrew
Latham, Arthur (CityafW' minster P'ton)
Wainwright, Edwin (Dearne Valley)


Garrett, W. E. (Wallsend)
Madden, M. 0. F.
Wainwright, Richard (Colne Valley)


Grimond, Rt. Hn. J.
Mitchell, R. C. (S'hampton, Itchen)
Whitehead, Phillip


Hamling, William
Ross, Stephen (Isle of Wight)
Wilson, Alexander (Hamilton)


Hooson, Emlyn
Silverman, Julius
Winstanley, Dr. Michael


Howells, Geraint (Cardigan)
Skinner, Dennis



Hughes, Mark (Durham)
Smith, Cyril (Rochdale)
TELLERS FOR THE NOES:


Jones, Alec (Rhondda)
Steel, David
Mr. Robert Maxwell-Hyslop and


Judd, Frank
Stewart, Rt. Hn. M. (H'sth,Fulh'm)
Mrs. Lena Jeger


Kerr, Russell

Question accordingly agreed to.

Bill read a Second time and committed.

NORTHERN IRELAND (AGRICULTURAL PAYMENTS)

8.01 p.m.

The Minister of State for Northern Ireland (Mr. Stanley Orme): I beg to move,
That the Agriculture Payments (Extension) (Northern Ireland) Order 1974, a copy of which was laid before this House on 12th March, be approved.
The right hon. Member for Cambridgeshire (Mr. Pym) who is to reply for the Opposition deals not only with matters concerning Northern Ireland but with agriculture. However, his double duty is completely met by the business

before us this evening. I think the right hon. Gentleman is conversant with the order because it is similar to one which was to have been brought before the House by his administration before the General Election.
The order renews the special assistance grant to Northern Ireland agriculture for a further three years at a current rate of £1·9 million per annum. The order was made by the previous administration on 7th February and laid before Parliament on 12th March. Under the provisions of Section 32 of the Agriculture Act 1957 the order will be of no effect unless approved by resolution of each House of Parliament. My noble Friend will be dealing with it later this week in another place.
The grant originated in the decontrol of food marketing and of agricultural


produce which took place in 1954. During the period of control farmers throughout the United Kingdom received from the Ministry of Food the same fixed price for their produce sold off the farm. The system introduced in 1954 gave farmers throughout the United Kingdom the same deficiency payments based on the difference between the average market price for the country as a whole and the guaranteed price. This meant that when a deficiency payment was made each farmer received the same addition to the price he obtained from the market irrespective of the actual difference between the price he himself had obtained and the guaranteed price.
This presented a special difficulty for Northern Ireland because of its remoteness from the main markets in Great Britain. Northern Irish farmers tend to get lower prices on average than farmers in most parts of Great Britain. This was recognised in 1954, and the Government decided to make a grant each year to the Government of Northern Ireland for the purpose of assisting agriculture in Northern Ireland. The grant is now payable under Section 32 of the Agriculture Act 1957. This provides for the grant to be extended for periods of up to five years at a time and for the amount of the grant to be varied in respect of any extension period subject of course to parliamentary control and approval.
Until 1970 the grant was normally extended for the maximum period of five years allowed by the Act. This made possible the formulation of long-term schemes to improve the efficiency of Northern Ireland agriculture and enabled producers to plan ahead. Because of the uncertainty in 1970 over future agricultural support arrangements under the EEC proposals the period of the grant was fixed for three years. The Government have concluded that the grant should be extended for a further period of three years commencing on 1st April 1974.
The Government have taken several points into account in deciding to continue the grant at its present rate. First they have examined and compared the market prices obtained for the guaranteed agricultural commodities both in Northern Ireland and Great Britain. Secondly, the grant was considered in the

context of the wider policy implications for Northern Ireland in view of the political situation. Thirdly, they have taken into account the changes in agricultural support arrangements in the United Kingdom. Taking all these factors into account the Government consider the renewal of the grant justified.
I should emphasise that the grant is not intended merely as a means of supplementing farmers' prices in Northern Ireland. The schemes financed by it are designed to encourage greater efficiency of production and more orderly marketing which will help Northern Irish farmers overcome their remoteness disadvantage. The schemes are described briefly in a statement laid before Parliament each year and a statement for 1973–74 was laid before the House on 4th February. Agriculture is a major industry in Northern Ireland. That is why it continues to receive Government support.
Finally, I will say a word about the way in which the grant is used. Allocation of the fund between various schemes is in the hands of the Department of Agriculture for Northern Ireland, subject to general approval by the three United Kingdom agricultural Ministers and the Treasury. Approval by the United Kingdom Ministers is required because the special assistance is part of the total assistance given by the United Kingdom Government under the Agriculture Act 1957 to farmers in the United Kingdom and must be consistent with the Government's overall agricultural policy. Subject to this, the disbursement of the money is a matter for the Northern Ireland Department of Agriculture.

8.7 p.m.

Mr. Francis Pym: I am grateful to the Minister of State for his remarks at the outset and I am also grateful for the explanation he gave about the order. The Opposition certainly support it. It would be impossible for me to do anything else because my signature is on it.
The Minister of State is perfectly right in saying that agriculture is even more important in Northern Ireland than it is in the rest of the United Kingdom. I do not think anyone would question that Northern Ireland agriculture has many extra costs to bear, particularly in relation


to pigs and beef. The order extends the grants which are a contribution to these extra costs. Northern Ireland is much more heavily dependent upon imported feeding stuffs for the livestock sector of the industry than is the rest of the United Kingdom. About 80 per cent. of feeding stuffs used in Northern Ireland are imported, as compared with about 30 per cent. in the United Kingdom.
My figures show that for the current year the feedstuffs cost was expected to total about £4 million more than the equivalent price to farmers in Great Britain. and that is a direct result of the comparative remoteness to which the Minister of State referred. I do not think anyone will dispute that the rearing of calves and pigs is more expensive in Northern Ireland. I think the cost per calf is between £3 and £8 per beast more in Belfast than in this country, and is also more expensive in Belfast than in Dublin. That aspect must be taken into account.
In addition, there are the lower across-the-board market prices for produce. I believe that prices in Northern Ireland have fallen below the level applying generally in the United Kingdom by about £4 million. Again, transport and remoteness account for that.
The problem is one of both higher costs and lower incomes for farmers in Northern Ireland. This country has sought to put it right in various ways. The money that will be made available by the order, if approved by the House, is not the only means by which assistance will be given to farmers in Northern Ireland. There is the development programme grant, as well as the employment grant—which was introduced by my right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw), costing between £2 million and £3 million —and a grant towards the transport costs of eggs. Therefore, various grants are available to make up the difference. This is very important from the point of view of Northern Ireland.
The only question is whether the amount is adequate. There is now a new factor to consider, namely, the negotiations completed by the Minister of Agriculture in Brussels last week and the way in which these negotiations will affect Northern Ireland. With regard to beef, I

understand that there is to be no increase in the calf subsidy in Northern Ireland. It is to be done on a different basis in Northern Ireland, namely, on payment per head of fat cattle sold. I understand that the amount is related to the compensatory amounts as between Northern Ireland and the Republic, and that it amounts to about £20 per bullock. This is undoubtedly a great help, and is an arrangement which farmers in the United Kingdom would have preferred to the calf subsidy. I appreciate that this is not particularly a Northern Ireland point, but the hon. Gentleman will see in a moment what I am getting at.
The beef producers, through the negotiations of the Minister for Agriculture, have secured an arrangement which is much more acceptable to them than is the calf subsidy.
Following the negotiations in Brussels last week, the arrangements for pigs are now the same for Northern Ireland as for the rest of Great Britain. Pig producers in Northern Ireland have been in the greatest difficulty, and I hope and presume that most of the £1·9 million will go to them, as they are the sector at present in the greatest need.
I do not know whether the hon. Gentleman can confirm it, but I think I am right in saying that slaughtering of sows in Northern Ireland has been on a larger scale than in the rest of the United Kingdom. If the money goes to the pig producers rather than to any other sector it will fulfil a particularly useful purpose.
When I first became Secretary of State for Northern Ireland it was necessary to take an early decision on the future of this grant because the existing grant expires on 31st March. It was necessary to know well in advance whether the order was to be continued. It was in December that the Under-Secretary of State for Northern Ireland announced in the House that it was the intention of the then Government to continue the grant in this way. After that the price of feed went up in Northern Ireland, and produced difficulties. Towards the end of January and at the beginning of February I had a number of meetings with those responsible for agriculture in the Northern Ireland Executive, including Mr. Faulkner and Mr. Morrell, who were highly concerned about rising costs.
From the figures I was able to obtain at that time it appeared that the right amount would be £1·9 million, but that was a number of weeks ago. I do not know whether the hon. Gentleman has more up-to-date figures to confirm that that judgment was right. If not does he consider it appropriate to analyse and carefully review the costs of rearing pigs and beef in Northern Ireland to see whether the money provided under the order is adequate.
The House will wish to see that Northern Ireland producers are competing on a fair basis with producers in the rest of the United Kingdom. If the hon. Gentleman can assure us on that point—or otherwise undertake to go into the facts and figures most carefully and thereafter assure the House that there is adequate provision in the £1.9 million, in the circumstances at present appertaining both the House and the producers in Northern Ireland will be reassured.

8.15 p.m.

Mr. James Kilfedder: I welcome the figure of £1·9 million announced by the Minister, but I do not regard it as an adequate amount. According to my estimates the amount needed should be three or four times that figure if Ulster farmers are to be adequately helped. I therefore agree with the right hon. Member for Cambridgeshire (Mr. Pym) that there should be careful analysis and examination of pig and beef production in Northern Ireland to ensure that Ulster farmers get a fair deal.
Both Front Benches have already accepted that agriculture is a major industry in Northern Ireland. Indeed, agriculture is more important to Northern Ireland than it is to the rest of the United Kingdom. I trust that the Government will take further action to meet the special problems of farmers in Northern Ireland at present, such as the cost of feeding stuffs. I understand that feeding stuffs have gone up by £2 per ton within the past week. Four weeks ago there was an increase of £4 per ton. Such increases mean that the Ulster farmer cannot compete with his counterparts in the rest of the United Kingdom. Millers in Ulster have to maintain their staff and their mills and therefore feeding costs get greater.
I trust that the Minister can give some hope to Ulster farmers that the Government will help with the problem of feeding stuffs costs. The Government need urgently to tackle the differential between the cost of feeding stuffs in Northern Ireland and their cost in the rest of the United Kingdom. The situation in Northern Ireland is desperate at present. The present perilous position of Ulster farmers has been constantly emphasised by them, and by their political representatives, irrespective of party. Pig producers in Northern Ireland are probably in a worse state than other farmers, although the plight of the beef producer must also be carefully borne in mind.
How has the Minister arrived at this amount of £1·9 million in the Agriculture Payments Order? I understand that Northern Ireland imports in the region of 70 per cent. of its feeding stuffs, whereas the rest of Great Britain depends on only 30 per cent. of imported feeding stuffs. This underlines the grave need of the Ulster farmer for greater financial help.
Under the arrangements recently entered into in Brussels by the Minister of Agriculture, pig producers are to receive a payment of £3·50 per pig, but this will be for only two months. I understand that thereafter the amount will decrease. The figure of £3·50 per pig barely covers the cost of production in Northern Ireland and, no doubt, in the rest of the United Kingdom.
I suppose that the Government believe that because of the cut-back in pig production the market in Northern Ireland will harden, that pigs will be in short supply, that prices will therefore rise, and that farmers will be helped in that way; but that is the wrong way in which to look at the matter, because pig producers are getting rid of their breeding herds. I understand that they have disposed of nearly a third of them, which in the long run will affect the pig industry in Northern Ireland. Once the market improves, it is difficult to replace a breeding herd that has been carefully built up over the years.
I am sure that the Minister understands the position. I hope that his concern will not be expressed just in words of sympathy—he is always ready to offer such words—but also by an offer of cash to the farmer. I appeal to him, when he winds up this brief but important debate,


to say that more cash will be available to the pig producer. The Minister has been made aware of the situation in Northern Ireland. I shall not repeat what I have said in the Northern Ireland Assembly and to Ministers here. The Minister must know that unless immediate help is given to farmers in Northern Ireland this major industry will be so gravely affected that it will take years to recover.
Northern Ireland sends its products to Great Britain. The Government should bear in mind that that is a help to the British economy. If the farmers are turned off the land because they are made bankrupt they will join the queues of unemployed in the cities. It is more expensive to produce jobs in industry for them than to keep them on their farms by giving them a reasonable amount of money.
All that I am asking for is justice for the Ulster farmer.

8.23 p.m.

Mr. Orme: By leave of the House; I should like to reply to the salient points raised by the right hon. Member for Cambridgeshire (Mr. Pym) and the hon. Member for Down, North (Mr. Kilfedder).
One of the key points was whether the £1·9 million is adequate in the current inflationary situation. I have been informed that the figure was arrived at last year by a working party of three ministries, which recommended renewal on a three-year basis rather than the previous five-year basis. That recommendation was based on figures gathered over a period. For example, in 1973–74 the estimated expenditure was £1,758,000. Out of an estimate of just under £1·9 million, the take-up was £1,668,000. That answers the hon. Gentleman's question about the adequacy of the amount. In that year a considerable amount was not taken up.
Of the amount we are talking about for 1974·75, it is estimated that £1,893,000 will be taken up, leaving a £7,000 gap. But, again, that is the top estimate, based on current figures.
The right hon. Gentleman wanted the situation brought right up to date, including the past six weeks. If everything is taken up, which is not likely on

the basis of experience, that £1.9 million will be adequate.

Mr. Kilfedder: Does the Minister agree that the remoteness grant was and is provided to go on production schemes? It is not meant to go on to the end price of the farmer's product. That is why it has not been taken up.

Mr. Orme: I agree, but it is open to the farmers' union to suggest schemes and to apply pressure. No major dissatisfaction has been shown by the farmers in Northern Ireland in this regard.
I have been advised that discussions on the use of the grant have been held with the National Farmers' Union. It has agreed the proposals for 1974–75, which do not include any expenditure on pigs. That matter is covered by the agreement brought back from Brussels by my right hon. Friend the Minister for Agriculture, Fisheries and Food. There are on the Order Paper this week Questions dealing with it. The same grant applies in that case to Northern Ireland as to the rest of the United Kingdom, and will apply for about four months. The only assurance I can give is that if it proves to be inadequate and representations about pig production are made, the matter can be examined. My right hon. Friend's endeavours in Brussels have met some of the main points of criticism by farmers, not least in Northern Ireland.
In view of the EEC arrangements affecting pig production in Northern Ireland, I believe that the order meets the immediate situation. It is open to be questioned. Any hon. Member who wishes to do so can raise the matter at a future date.
I hope that the House will approve the order, so that the farmers in Northern Ireland can have what is a genuine and needed subsidy.

Question put and agreed to.

Resolved,
That the Agriculture Payments (Extension) (Northern Ireland) Order 1974, a copy of which was laid before this House on 12th March, be approved.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

NEWSPAPERS (SCOTLAND)

8.28 p.m.

Mr. James Sillars: It is a change to be able to begin an Adjournment debate at such an early hour of the night. It gives me great pleasure to raise this subject on the Adjournment. I should at once declare an interest as an occasional contributor to the Scottish newspapers.
Concern about the future of the newspaper industry in Scotland is widespread following the announcement by Beaver-brook Newspapers Limited to close the Glasgow operations of the Scottish Daily Express and the Scottish Sunday Express and to cease publication of the Glasgow Evening Citizen. The ceasing of publication of the Evening Citizen will bring pain to the hon. Member for Glasgow, Cathcart (Mr. Taylor), who used to regale us in it every Friday night with a special article.
At the outset of the debate, I pay tribute to the way in which my hon. Friend the Member for Glasgow, Provan (Mr. Brown) and other Members, of all parties, have applied themselves to the immediate crisis facing the industry. I include in that compliment the Member for Cathcart.

Mr. Dennis Skinner: Where is the Scottish National Party?

Mr. Sillars: My hon. Friend the Member for Bolsover (Mr. Skinner) asks a pertinent question. Exactly where are the representatives of the Scottish National Party? I understand that on Saturday that party sent a representative to a rally of workers in Glasgow and that its representative addressed the men. Those men will be disappointed to know that the Scottish National Party is not represented in the Chamber when we have not just half an hour, but a considerable time to discuss this matter. I see that several Scottish Nationalists are now arriving, somewhat late.
I shall concentrate on the problems of the Scottish Daily Express, the Scottish, Sunday Express and the Glasgow Evening Citizen. I shall widen the debate to consider the future of the industry as a whole, with special reference to the Scottish national newspapers printed in Scotland.
Our concern about the newspaper industry is about the substantial number of jobs that will be lost and the contribution that the Press can make to our democracy. I shall dwell on the immediate problem presented by the imminent closure of the three papers that I have mentioned. As my hon. Friend the Member for Provan has said, it is a disgrace that the management of the Express group should take a closure decision of this magnitude without adequate consultation with the trade unions and with the minimum notice to employees.
The Express group has never been shy of criticising others. If any other major employer had acted in this way, we may be assured that the Scottish Daily Express would have carried articles full of acid comment about the need for modern management to recognise its responsibilities to its workers as well as to its balance sheet. If a trade union had acted in such a high-handed manner, perhaps even Cummings the cartoonist would have been employed to give added point to the condemnation that the group would have heaped on the wrongdoers.
My hon. Friend the Member for Glasgow, Garscadden (Mr. Small) received a letter from a constituent employed by Beaverbrook Newspapers Limited. It is dated 20th March. My hon. Friend handed it to me this morning. The letter illustrates clearly the feelings of the working people involved in the closure. It says:
Last night we were presented with redundancy terms offered by the firm and it is a paragraph in these terms which I would be grateful if you would peruse and form an opinion on.
He then quotes the redundancy terms, which are as follows:
It is our aim that a further cash payment of one week's average earnings for each year of service will become payable on 1st January 1975 to everyone who is under 65 at that date. This payment will be dependent upon normal production and distribution continuing in London, Manchester and Glasgow until the end of the month and thereafter in Manchester and London.
My hon. Friend's constituent then makes a point that has previously been made. He says:
It seems that the above, especially the sentence which I have underscored, constitutes a form of industrial blackmail of the very worst form. How can a restriction or penalty clause be inserted in an agreement of this type


over which we in the Glasgow office will have absolutely no control if this office does close on March 30th as threatened. It also means that trade unionists in both London and Manchester offices will have the millstone round their neck in any negotiations which they enter into for the next nine months that they may be denying brother trade unionists of a considerable amount of hard cash.
That letter perfectly illustrates the feelings of the men involved in this situation. Whatever the outcome of the crisis, Sir Max Aitken may be assured that in Scotland no one will ever regard his lectures to the nation on the conduct of affairs as worthy of much attention.
The Aitken family has spent two generations lecturing this country on how it should run its business. They have done so from the secure position of Press power without responsibility. The first time they have come face to face with responsibility in a very difficult situation, in which they have had to take decisions with consequences, as opposed to commenting on the decisions of others, their performance has come nowhere near the high standard that they have always demanded of others, especially of Labour Ministers.
It is obvious that the Express group has for some time been determined to leave Glasgow and shift its operations to Manchester and London. I have a hunch —no more than that—that such a move is only the first stage in moving all operations to London, and I would caution the Express workers in Manchester to be wary of the future. It seems to me that in Mr. Jocelyn Stevens, deputy chairman and managing director, the Express group has a regional asset stripper who will not rest content until he has feathered the London nest at the expense of the rest.
I am not impressed by the fact that the Scottish Daily Express and the Scottish Sunday Express will continue to circulate in Scotland, although printed in Manchester. The Scottish Daily Express, the self-styled, "Voice of Scotland", will have difficulty in keeping readers when we all know that it will only be an echo from Manchester, with a news deadline so much advanced into the evening that it will quickly become no more than a Scottish regional edition of a basically English newspaper. Neither Mr. Stevens nor anyone else seriously expects the Scottish Daily Express and the Scottish

Sunday Express to do other than die a natural death from increasing irrelevance in the news content and consequent falling readership.
It is clear to me that the Express group management has no intention of saving the Scottish papers and the Scottish jobs that go with them The lack of consultation with the unions, the extremely short notice given to employees, and the closure announcement leaving limited time for counter-action, all point to a management strategy designed to deny the precious time needed in which a saving operation could become successful
This closure means that we are faced with a job loss of about 1,800 Most if not all of these jobs are specialised, and it will be impossible for many of the people involved to find alternative work. Scottish unemployment is already generally high and it is very high in the greater Glasgow area. We simply cannot afford a job loss of this size in that area.
If the Express group will not attempt to save its Scottish operations, the Government must be prepared to step in. I know how ironic it is to ask a Labour Government to maintain the existence of these newspapers, all of which are noted for the rough treatment that they give to the Labour Party and the trade union movement, but the editorial policy of the Express papers should not blind us to the fact that the workers whose living standards are at risk are the most important factor. There is also the question of the need to have more newspapers, or at least no fewer newspapers, so that the diverse views of a genuine democracy get full expression.
The workers involved are trade unionists and entitled to our sympathy, concern and action to save their jobs. I do not regard the workers employed by the Express newspapers as different from any other workers employed by private enterprise. They are trade unionists affiliated to the Scottish TUC, and most of them to the British TUC, and they therefore are, to my mind at least, people who should get the maximum consideration from a Labour Government.
As the closure date moves nearer—it has already passed for the Scottish Sunday Express—it is apparent that the


solution will have to be radical. This is the sort of situation that calls for the kind of imaginative, radical policies that Labour told the country during the recent election were required to tackle the problems that we were bound to face in a Britain in crisis.
What I suggest to the Government is that they make one final and urgent effort to assist Beaverbrook Newspapers to save its Scottish operation and then, if that fails, to act, or to legislate—and I know that on an Adjournment debate I cannot ask for a Bill, so I will simply put it on that basis—to save this operation and the three newspapers concerned.
In the event of Beaverbrook Newspapers giving a final "thumbs down" to the idea of remaining in Scotland, the Government should bring in a Bill, or take administrative action, to take the Scottish operation into the ownership of a newspaper trust, with control of that trust vested in a policy board drawn from the workers employed by the three papers. Government action could lay out a scheme of policy control and executive management on the two-tier board system of industrial democracy about which there is so much talk at present—that is, a top-tier policy-making board and a second-tier executive board to give effect to policy decisions and to handle the day-to-day running of the company's operations.
The Government could take the necessary action to give the trust adequate launching aid and ensure that policy-making lay in the hands of the trust's policy board and that it was not subject to interference or control by the Government. This would be a new kind of newspaper ownership in this country, and I suggest that it would be a better kind. I know that many people back away from the idea of direct State help to newspapers, because they fear that where Government money goes, so does Government control. That is not always so and it need not be so if Parliament wills differently.
This year in Scotland alone, thanks to the wisdom of a Labour Government, we shall pump £40 million into firms through the regional employment premium. I know that my hon. Friend the Member for Lanarkshire, North (Mr. Smith) is absolutely delighted at having gained a victory earlier this afternoon at the end of his long campaign for the retention of REP.

As well as the money from REP, many more millions of pounds will be pumped into industry in Scotland through the Industry Act. The REP payments will carry no Government control, and I suggest that very little control will follow money granted under the Industry Act. That proves that Government money need not necessarily march in hand with Government control.
If anyone needs further evidence, he should look at the Swedish example. The Swedish Parliament helps to subsidise Swedish newspapers and no one suggests that it has ever intervened in or interfered with the editorial policy of any Swedish newspaper. There are, therefore, ample precedents for such use of Government money in this country, and there are precedents in other Western democracies.
The type of action that I am suggesting properly implemented could ensure complete editorial freedom from Government for these newspapers. Given that we are a minority Government and that such a measure would have to command all-party support, we may feel sure that this Parliament is capable of framing a measure to save jobs and preserve editorial freedom, not, I hasten to add, that anyone in the Labour Party would wish to do otherwise.
Such action as I have suggested would have great benefits. First, it would save 1,800 jobs and three newspapers which, whatever I may think of their political policy, are good newspapers in the technical sense. It would also stop the emergence of a monopoly Press power, something of great concern to those who recognise that monopoly of comment through the Press is bad for the health of a democracy.
Such Government action could not be classified as assistance to some lame duck, because the Scottish Daily Express and the other two newspapers, while not commanding the readership of former years, are nevertheless products that many people want. The circulation of the Evening Citizen is still 162,000, while the circulation of the Scottish Daily Express is more than 550,000. It sells around 20,000 copies a day more than it sold six months ago. One in every 10 people in Scotland buys this daily newspaper and it is read, according to the Sunday Times. in 44 per cent. of Scottish homes.
To save these newspapers would therefore be meeting a need in Scotland. If no action is taken that need will not be met, because we shall have allowed an asset stripper to strip an essential part of the Scottish Press. It would be crazy economics for an industry to take the axe to a daily newspaper with a circulation of more than 550,000 in a population of only 5 million.
The circulation figures that I have given, and my last comment, bring me back to the wider subject of the help of the Scottish newspaper industry. The question that lurks in the back of everyone's mind is "If the Express group cannot hang on, how many more Scottish newspapers are either in trouble now or about to run into trouble?".
Under the present system of newspaper economics, the health of the industry is determined by the amount of advertising available and the industry's ability to absorb costs on essentials such as newsprint. There are few activities that reflect the vagaries of the economy with as much accuracy as does the advertising world.
For our newspapers to be tied too firmly to success or failure in attracting advertising is to invite the kind of closures that we have witnessed over past years. Several hon. Members are readers of the Labour Weekly, and they will know that a table was published in Labour Weekly at the weekend showing that since 1954, 30 major local or national newspapers in the United Kingdom have died through merger or closure. As we are now moving into a period of considerable economic difficulty, it is a fair bet that advertising will become more difficult to capture and that the economics of our newspapers will get worse—it is unlikely that they will get better.
Added to that problem, newsprint costs have gone up from £74 per tonne to £114 per tonne. An immediate Government inquiry is needed into newsprint costs, as there have been mutterings in Press circles about monopoly control of the newsprint market and abuse of monopoly power to weaken certain rivals.
There are good grounds for asking which Scottish newspapers are either in trouble or about to face severe problems.

It is essential to maintain the number of national, evening and Sunday newspapers serving the various areas and voices in Scotland. It would be a tragedy not only in terms of jobs, but in terms of the quality of our democracy if we were to lose any of them.
I want the Government now to appoint a Royal Commission on the Scottish Press to examine the economic condition of the industry, its management, its independence and the rôle it plays in Scottish society, and to make recommendations on the steps required to improve its internal democracy, its economic viability and on what rôle public assistance can play in maintaining the present number of newspapers while providing cast-iron guarantees of absolute freedom from Government influence or control.
The simple facts are that our present methods of running the Press of Scotland that have been tolerated for so long are no longer adequate if we are to preserve what is left of the Press of Scotland. I would argue, notwithstanding the political bias of the Scottish Daily Express, that it would not be good for our democracy to enter a new phase of monopoly domination of popular newspapers, to be followed perhaps by monopoly domination of the so-called quality field, if some other newspaper, perhaps tied, like the Express, to the empire of someone whose main interests lie outside Scotland, were also to run into insuperable economic and financial difficulties.
There is the short-term need to save the three newspapers now under the axe, and the long-term need to put the industry on a sound economic footing, with public help if need be, and to base its operations on greater democratic control, with responsibility to a policy-making, body within Scotland. I trust that the Government will look carefully but quickly at the ideas that I have put forward.

8.49 p.m.

Mr. Hugh D. Brown: The whole House welcomes the debate and congratulates my hon. Friend the Member for South Ayrshire (Mr. Sillars) on being fortunate enough to have a couple of hours for his debate. My hon. Friend put forward some interesting ideas. I look forward to hearing the hon. Member for Glasgow, Cathcart (Mr. Taylor),


who has been one of the chief protagonists in Scotland in backing the workers in the Beaverbrook Press in their opposition to the closure. We have been active in this matter both inside and outside the House.
The strange thing is that little information has been made public and few of the facts are known. There has been a lot of speculation in the last week or so, and a little more information has emerged. One of the difficulties to be faced is the lack of knowledge about what, if any, proposals have been put before the Labour Goverment, or, indeed, before their Conservative predecessors. I shall return to this topic later, because there are certain questions that must be asked.
The feeling of despondency among workers in Albion Street cannot be overstressed, not just because of the high unemployment in the area—unemployment that is higher than average—but because in many cases the employees are highly skilled specialists and there is for them no alternative or comparable employment in the newspaper industry in Scotland. Despite rumours in the past, many workers have taken the view that the Beaverbrook organisation has been in trouble for some time, but there is a definite air of finality when a worker receives his redundancy notice giving him only 10 days in which to tell his wife that the mortgage payments and the money to run the family car will still have to be found in some way or other. This sort of news will obviously mean a drastic upheaval in the personal living standards of 1.800 Scottish families.
My impression, having spoken to many of the people in the area who are affected, was one of shock. Although there may have been rumours and speculation in the past, those workers were entitled to better treatment and should have been afforded more time to allow them to adjust their personal lives, quite apart from any question of the financial effect in the industry. I fully support the views that have been expressed about worker participation in the industry. I shall come to that point a little later in my remarks.
The workers in Albion Street are not wild militants who are trying to bring down the capitalist system. They are workers who are genuinely protesting

against the inefficiency and injustice of one part of the capital system It is hard to take what has happened from a newspaper which has constantly told the public that only those with a proper business experience in running a company can hope to succeed in a commercial enterprise. We have heard this sort of message from a newspaper which has campaigned on many issues and which has often been wrong politically. That newspaper may even have been wrong about the Common Market, although I am not sure that my hon. Friend the Member for South Ayrshire will agree with me. I do not want to be controversial, but in political terms that newspaper has often been wrong. Running through the message of the newspaper concerned has been a contempt for labour and the trade union movement. It has been made clear that unless one is on the other side of the fence, one cannot even run a local council—quite apart from running a Government or a business venture.
This evening we are discussing one of the most inefficient and incompetent managements in the newspaper industry. There is general agreement—I say nothing of the way in which it has treated its workers, even at local level—that the local management has not enjoyed the confidence of the workers. One has to make allowances for the almost universal attitude by workers that the boss is seldom right, but there is a lot of truth in what many workers are saying about the local management. When things go wrong, it is typical for management to blame individual workers.
Management blames the rising cost of newsprint. It blames the railway dispute. It blames the trouble in the mining industry. It blames all sorts of factors which are common to other newspaper proprietors. When people do that they are attempting to cover up their own deficiencies.
I wish to put a number of questions to my hon. Friend, because an inquiry is needed into the background. Were there previous requests to increase prices? If so, when were they made? When were they allowed? Was there a further request? Was it in the life of the previous administration? When was the application made for approval of the merger? Was anyone fiddling around because we


were either approaching a General Election or in the middle of one? Has there been a specific request for a newsprint subsidy? I do not think that that is a starter, but a company in difficult financial circumstances might have found it possible to make specific proposals or to ask for specific help to tide it over. Was any suggestion made about a newsprint subsidy which might have been helpful?
What about the rôle of the banks? Is there any shortage of credit facilities, or is there some way in which the Government have direct responsibility for giving credit facilities if they were asked? Were any specific proposals made? The most practical suggestion to have been made for the short term was the possibility of the Fraser Group taking over the existing Express premises and printing, under its ownership by contract or by some leasing arrangement with the Beaverbrook Group, all the Scottish newspapers involved. My understanding is that the unions are inclined to accept that, technically, that is not possible, given the facilities there, but, knowing that the Fraser Group has to move at some time and that it needs to expand, would that have been possible?
Would it have been possible for the Government to supply assistance? It would have been worth considering if there had been a proposition, with a firm commitment, to extend the premises in Albion Street to make it the centre for the Fraser Group plus the existing Beaverbrook Group. That might quite properly have attracted some kind of assistance under the Industry Act.
In any event, all these matters presumably do nothing to stop the key being turned in the door on Saturday. For that reason the matter is urgent. Is anyone still considering it? In the past week, discussions have been going on. Have they produced anything constructive from anyone where the Government have some responsibility? In saying that, I am not criticising the Government. I doubt whether there is any specific proposal before the Government, but this House and the workers concerned are entitled to information.
The question in the short term is whether there is any way, possibly with Government assistance, that the decision

can be postponed, even for a couple of weeks. Can other Scottish interests be found? I have no doubt that there will be some expression of opinion from the Scottish National Party.
I have not observed any great clamour by Scottish interests desperate to take over and make a bid for this group. I regard Sir Hugh Fraser as the best of a bad lot. At least he has some Scottish background, interest and concern. However, I do not see any great clamour by the entrepreneurs in Scotland desperately anxious to take over this group and keep it out of Manchester's control. It is a pity that the matter is not less complicated. The SNP could then say that it was just London control. The fact of Manchester's coming into the matter complicates it. Nevertheless, I have no evidence of any great clamour or rallying round of Scottish interests to have what are basically Scottish papers. I should be delighted if some kind of co-operative effort by the trade unions involved could also attract Government money.
I agree with my hon. Friend the Member for South Ayrshire that in an Adjournment debate one cannot call for legislation. But we do not have much time. Therefore, we require a holding operation to give us the time we need. That is the essence of the matter.
Finally, there has been some agreement —this is not political bias, but it might be taken as such—that if it is possible to set up the IBA for broadcasting, whether sound radio or television, it should be possible to set up something comparable for the Press. It is not good enough that papers like the Glasgow Evening Citizen and the Daily Express should have no obligation placed upon them to be impartial. The Glasgow Evening Citizen would not even allow space to a Labour columnist like that given to the hon. Member for Glasgow, Cathcart, to air his views. Some papers try to give space for other views, but seldom, if ever, does the Beaverbrook Press.
I hope that from this situation support will grow for the idea of a Royal Commission on the Press which will go into the matter and perhaps recommend ways and means not of Government control, but of ensuring a greater degree of impartiality in the Press. Such a recommendation would give many employees a


chance to do their work with greater dignity rather than churn out stuff to which they are often bitterly opposed.
I realise that we cannot always say the things that we want to say. I am not suggesting that we are going into a dictatorial State, but there is no dignity for employees if they are not consulted about editorial policy. This is a matter that sometimes leads us into criticising journalists when we should be criticising the editors and the owners. The hon. Member for Glasgow, Cathcart knows what I mean. It suits him, because they churn out rubbish with which he agrees. However, it does not suit the interests of those who wish to undertake their work with dignity.
I am convinced that there is a need to examine the long-term rôle of the Press. However, that does not detract from my conviction that something needs to be done in the short term as a matter of urgency.

9.4 p.m.

Mr. Tam Dalyell: I echo what was said by my hon. Friend the Member for South Ayrshire (Mr. Sillars), whose initiative obtained this timely debate. I also echo what was said by my hon. Friend the Member for Glasgow, Provan (Mr. Brown) about time being of the essence.
I have just received a phone call from my friend and constituent, Alistair Mackie, who is the father of the federated chapels in Albion Street, Glasgow. He told me that the employees have tonight decided to try to set up an employees' enterprise involving Scottish industrialists and any Scottish capital that is prepared to help. According to Alistair Mackie, the idea is to float a new newspaper. A feasibility study has been done, and at first sight, at any rate, the accountants are optimistic. The question that arises is that of management consultancy. It will be no news to the Government that if a group of journalists and employees are to do the job they will need all the advice and technical help they can get. I have been asked to inquire from the Government whether any help and advice can be provided on a management consultancy basis.
The crunch question is whether they will have access to the Beaverbrook accounts and the internal operations of

the Beaverbrook set-up. I hope, therefore, that in discussions with the Beaverbrook Press my right hon. Friends will impress upon those concerned that if they are not prepared to run a Scottish newspaper themselves they should at least not be difficult, and should allow others to have a go at trying to do so. I ask my right hon. Friends to use all their influence at least to give this venture a go and to get information without which it will not get off the ground.
My hon. Friend the Member for South Ayrshire eloquently outlined the problems facing journalists, but one must remember the problems confronting printers. Many of them are more than 50 years old and they will find it difficult, if not impossible, to get jobs in our area.
Is the Minister in a position to report on my right hon. Friend's discussions with Sir Hugh Fraser and Mr. Forgie of the Glasgow Herald? It was reported yesterday that they were prepared to put in some finance and perhaps run the Scottish Daily Express. But that would depend upon their getting the titles from Mr. Joceyln Stevens and Sir Max Aitken. Mr. Stevens, perhaps unwisely, has categorically and dogmatically said that on no account will the titles be sold. This is a moral issue, because we get back to the question whether employers are entitled, morally at any rate, if not legally, to prevent other people from having a go at what they themselves are not prepared to do. I wonder whether any discussion has taken place, as some of us asked that it should, on the question of these titles. Perhaps my hon. Friend can tell us that.
What is the Government's view about the future of newspapers, as such, in Scotland, and what is or is not to happen under Section 54 of the Fair Trading Act? This is the business of my right hon. Friend the Secretary of State for Prices and Consumer Protection. I know that discussions have been going on with her Department. Is my hon. Friend in a position to report on them?
May I ask again about discussions on the question of Reeds? It is not only a newsprint crisis to which my hon. Friend the Member for South Ayrshire referred, but a tricky issue of monopoly, not only of newsprint but of printing ink. Discussions have been going on, and I ask


my hon. Friend to let us have his comments.
Have the Government had any discussions with Lloyds? They are the bankers concerned, and it was their action which precipitated if not the long-term crisis at least the medium-term one.
I hope that my hon. Friend will be able to report on those sensitive and difficult matters.

9.10 p.m.

Mr. George Reid: I welcome the initiative of the hon. Member for South Ayrshire (Mr. Sillars) and generally associate myself with his remarks. I must declare a small personal interest, first as a columnist for a rival newspaper, albeit irregular, but, more important, as a journalist who started his working life 12 years ago in Albion Street in the Scottish Daily Express in Glasgow.
The freedom of the Press is not the private property of the newspaper proprietors. It is not the plaything of the Sir Hugh Frasers or the Jocelyn Stevenses. It is not the property even of the newspaper workers or of the journalists. The freedom of the Press is and must be the property of the people. It is always a supreme tragedy when any newspaper dies anywhere. It would be terrible for Glasgow, with its current unemployment, and for the men who work in Beaverbrook Newspapers in that city, if the Scottish Daily Express, the Scottish Sunday Express and the Citizen were to fold. No Labour Government could allow that situation to develop in the city of Glasgow.
Three factors must weigh in our policy. The first, clearly, is people—a loss of about 1,800 jobs and possibly another 600 in the spin-off in distribution and in regional offices. It would be a human tragedy for those men if those newspapers were to fold. Alternative employment simply is not available to them in Scotland.
The second factor is the near-monopoly situation being created in the popular Press in Scotland. Other newspapers have pulled back from Scotland, the Scottish editions have been printed from Manchester, and the distinctive Scottish characteristics have vanished. If a monopoly

is created in the popular Press that, too, is at the Government's peril and the peril of the newspaper proprietors.
The third factor lying behind the death, the pull-back, of all these newspapers is the dead hand of London centralisation of the media in Scotland, a lack of proper understanding of the newspaper situation, of newspaper economics there, of the Scottish worker and, above all, of the Scottish newspaper worker.
Various proprietors have alleged that the Beaverbrook Group in Scotland is unprofitable. If sales of the Scottish Daily Express were repeated on a Goschen scale throughout the United Kingdom, the Express nationally would be selling 2 million copies more each day. The books of the Beaverbrook Group should be carefully looked at. Within the last few years new high-speed colour presses have been installed in Albion Street to be withdrawn unused to the London Evening Standard. That situation, on the evidence given me by the federated chapels, certainly bears investigation.

Mr. Teddy Taylor: This is an interesting point. Could the hon. Gentleman find out any information about why that was done?

Mr. Reid: I was told that it was to do with regional grants.
The allegation was that the decision was taken by a forward planning group which has been established in the Beaverbrook group for the last five years. As the hon. Member for South Ayrshire suggested, the decision has been in the making for considerably longer than the last few weeks; it may well have been in the making for several years. The vice-chairman of the forward planning group said in 1971 that 1974 would be a difficult year. So Beaverbrook management were well aware three years ago that this could be a difficult year for them in Scotland.
Attempts by the trade unions within the federated chapels in Glasgow to form a joint consultative group on the trade union side were not successful. If such a group had been established then, perhaps, both on the management and on the trade union side there could have been the free flow of information which is so desperately needed, especially in the newspaper industry.
I call the attention of hon. Members to a few facts about the profitability of the group. The group's pre-tax profits for 1973 were over £1·5 million. I suggest that this may be only the tip of the iceberg, because the 1973 accounts list the value of the group's buildings and land at £8·4 million at cost and £6·7 million in book value. According to the Investors Chronicle of 11th January 1974 there has been no revaluation of these assets for some six years. I suggest that, as the Investors Chronicle says, if just two buildings, the London Evening Standard building in Shoe Lane and the office block in Tollgate, Bristol, were properly valued, the current share price would be increased to £1·05 per share, in other words, quadrupled in value. As recently at 17th March the business section of The Guardian estimated that while Beaver-brook property is valued at £8 million it is, in fact, worth some £50 million. The Guardian says that that is a conservative estimate.
If we compare those figures we come to one conclusion—that this is an asset-stripping operation. It is clearly in the interests of the shareholders to strip assets, even if it means putting property before people, putting property before some 1,800 Scottish workers.
I also draw the attention of the House to one or two trade union facts. Within the last few years in the Express group in Scotland there has been a series of voluntary redundancies. But of what sort? In the editorial sector some 41 men have gone at a cost of £300,000, to be replaced by 43 men. I quote those facts from the federated chapels. Men have gone on redundancy terms of four weeks for every year worked. We now face a situation of two weeks, with—under threat—a possible third week.
I have met young journalists hired by the Express group in Scotland within the last three months. I want to quote from a letter sent by management to one of them:
The prospects are bright. The policy of this newspaper is growth.
For any management to send that to a young boy who then quit his house, still on a mortgage, and hired a flat in Glasgow only to receive a redundancy notice within the last few days is a scandal. This is contempt for the newspaper workers.
Stereo workers giving up secure employment on another newspaper and starting work within the last few weeks have been receiving redundancy money and finding themselves out on the street. That has been the fate of many Glasgow workers, wrongly, within recent years, as many right hon. and hon. Members will know only too well.
I come now to one or two possible suggestions as to what the Government might do in this matter. Firstly, I again associate myself with those remarks of the hon. Member for South Ayrshire, but I bring to the attention of the House a copy of a report prepared by the Ministry of Posts and Telecommunications within the last few months. I quote from the front page of The Journalist, which is the trade union newspaper of the National Union of Journalists. It is reported in The Journalist that the committee under the chairmanship of the Secretary of State for Industry and Minister of Posts and Telecommunications approved the following general aims for consideration by Her Majesty's Government when elected. Firstly,
To accept the principle of public funding and the channelling of centrally gathered funds.
That, I suggest, is the appropriate course of action within the city of Glasgow.
Secondly:
To seek, wherever possible, to move away from concentration of power over printing and broadcasting outlets and to decentralise responsibility and diversify outlets.
That, again, is immediately applicable to the situation in Glasgow.
Thirdly:
To make possible the widest practicable access to the media by community groups and by individuals"—
that is, to newspapers and television. I as someone who as a mere working journalist has disagreed violently with the policy of the Express group in times past but has had to work with it would certainly agree with that.
Then:
To seek to develop the structures of democratic accountability"—
that is the important point—
within the mass media and to allow greater influence to be exercised by those who work in them.


That is another point for the Government to consider.
Further:
To guarantee that all significant matters of policy under discussion by the Government on the mass media, and that all key decisions taken in broadcasting or publishing organisations, are made public so that their implications can be considered and are regularly reviewed on the same basis.
These are important points which were prepared by a committee under the chairmanship of the Minister of Posts and Telecommunications.
I come, finally, to the situation in Glasgow. The matter is urgent. Unless there is a clear Government voice I suspect that there will be closure on 30th March. Only a clear Government voice can give heart to the 2,000 workers in Albion Street. I look for that Government voice addressed to a city where unemployment is already far too high. I look to the possibility of the Government examining subsidies. I look to an immediate situation in Glasgow and, thereafter, to wider consideration being given to newspapers in other parts of the United Kingdom. When I started on the Express in Glasgow the news editor at the time said to me, "The job of any journalist is to comfort the afflicted and to afflict the comforted." In this situation it is clearly the Government's job to give real hope and comfort to these afflicted men in Glasgow and to afflict those very comfortable men who think they can get away with it.

9.22 p.m.

Mr. John Robertson: I cannot think of any good reason why I should be saying anything aimed at bringing about the continuation of the Scottish Daily Express. It has been in existence for a very long time and I have never known anyone who worked for it to express opinions of the management of the Express of the type that we have just heard.
Although it may be true that the freedom of the Press is a matter of importance for the whole public, the correct situation was stated a long time ago by Lord Beaverbrook to a Royal Commission. He said that he regarded the Express as his private pamphlet which he had created to carry his point of view and no other.
We know that the presses are strange places—a land of prima donnas and super-egos, employing people who might often be wrong but who never seem to be in doubt and who always find a tear in their eye for those who work for the Press in a situation like this but never have sympathy during the time that the Press is working.
I am alarmed, not at the closure of the Express as such, but at the monopoly position that is developing in Scotland. We cannot consider the question of the closure of the Express group of newspapers without examining the effect that commercial television and radio has had on these newspapers. The fact that another vehicle for advertising has been created does not mean that the amount of money available for advertising has increased It merely means that the amount available must be spread a little thinner and that somebody somewhere will perhaps be killed off.
If somebody is to be killed off I do not know that I should regret it if it had to be the Express. At least, I would have to give consideration to that. My regret is for the jobs of those who are employed there. I cannot see their getting jobs commensurate with their skills in any other industry.
The question is how it should be done. It is nonsense to suggest that the Government tonight can suddenly produce a plan to solve the problem. We need to hear the whole truth of the matter, and we need an inquiry into the situation. It is clear that the closure of the Express group of Scottish newspapers has been under discussion for a fairly long period. I see that the Glasgow district secretary of my trade union, Mr. Alec Ferry, said that the matter was definitely raised with the last administration either by the chairman or the owner of the Express group. We have heard nothing about what happened.
This is clearly a matter of secrecy, which needs to be opened up. We want to know what has been going on. I would never suggest to an administration I supported, without knowing all the facts and the background and without disclosing those facts about what had been going on, that they should seek to succour a private industry in this way. If there is the possibility—my hon. Friend


the Member for West Lothian (Mr. Dalyell) suggests there is, and as my hon. Friend the Member for South Ayrshire (Mr. Sillars) suggested there should be—of a co-operative effort between the workers and some other group, that is a different matter, but I should be against subsidising privately-owned newspapers.
We must, however, remember the growing power of the other group in Scotland —the Fraser group. It involves not only, the Glasgow Herald. The group owns many local newspapers. For example, the Paisley Daily Express is owned by the Fraser group. It enjoys complete editorial freedom and it has been very kind, but one always has the feeling that at any moment, if someone sneezes, the situation will change and the newspaper will no longer reflect the whole breadth of opinion but will become a vehicle for the point of view of the man who owns it. The idea that newspapers owned by private individuals are other than vehicles for the opinions and ideas of those individuals is nonsense. The great weakness of the newspaper industry is that it is the producer of private pamphlets of individuals seeking to bend people's minds to their way of thinking.
We need something much stronger than the Press Council. If we can run the BBC, which is also a vehicle for information and news, there is no reason why newspapers cannot be controlled. I do not particularly want to run them but they could be controlled in a similar way. Therefore, while it is important that we carry out an immediate rescue operation, if that is possible, we should not do it at any price. I should like to see the Government take over all the assets without compensation and produce a newspaper which is genuinely free and which reflects the point of view of not only the people it serves but those who work on it.

9.30 p.m.

Mr. Barry Henderson: We all have particularly in mind three questions—about the jobs, the resources of the newspaper itself, and the whole future of the Press in Scotland. Many people in my constituency work for this group of newspapers, or for other journalistic enterprises in the area, and I am concerned about what will happen to their skills and to their families, and about the effect on their morale.
I am sure that the whole House agrees that the kind of notice given in this closure is to be greatly deplored. Perhaps the Government can encourage us to think that the terms under which the notice was given may be improved.
The longer-term question of the strength and the balance of the Press in Scotland has been mentioned. It would be immensely sad if the yawning gap, which looks likely in the Scottish Press, appears.
The hon. Member for Glasgow, Provan (Mr. Brown) regarded a newsprint subsidy as a non-starter. However, the Government have been issuing subsidies of one kind or another fairly freely and price increases fairly freely. Perhaps both are applicable in this situation.
The hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), although he has greater experience than I have in these matters, talked two pieces of arrant nonsense and, in a matter as important as this, that is to be regretted. He spoke about the democratic accountability of a newspaper, and I wondered whether by that he meant Government control.

Mr. Reid: I was referring to a situation in which a journalist who sees the facts attempts to write them, only to be told that he may not do so. I was talking about democratic control by the workers within the industry.

Mr. Henderson: I would have thought that the word "democracy" had an implication beyond the workers in the industry. The readers of the newspaper also have to be considered.
The hon. Gentleman also spoke about an imaginary sales scale on which if the sales of the newspaper had been conducted on a particular basis throughout the United Kingdom, the Express group would have been immensely profitable. But that has no bearing on the matter. Surely the profitability of the newspaper is related to the number of copies produced from a given number of presses, or resources, and by a given number of workers. That is what matters, not the proportion of newspapers sold in any given part of the country.
We want to know from the Minister whether all possible rescuers of the situation, particularly those based in Scotland. have been approached and have considered whether this desperate situation can be rescued, even at this late hour.

9.34 p.m.

Mr. William Small: I do not understand any suggestion that there is Ministerial responsibility for a collapse of newspapers. Judging from the scenario described this evening, there is a case for a Fairfield experiment, such as took place after a collapse in the shipbuilding industry. A manager-worker relationship on the formula of the Fairfield experiment could be applied temporarily in this situation.
However, in terms of keeping Scotland tidy in its choice of newspapers. I prefer to read the Daily Express. The reason is that any parent rearing a family cannot leave some of the opposition stuff lying on his table. Sometimes he must walk to the shed if he wants to read it and to prevent young children reading such filth.
If the Scottish Daily Express has anything in its favour, that is its winning aspect, that it presents clinical and antiseptic news rather than the smut too generally accepted as a form of interesting reading material and as a way of making money. If for no other reason, there needs to be freedom of choice. If the other kind of reading material is to have a monopoly, it is a bad day for Scotland.

9.36 p.m.

Mr. Harry Ewing: It was inevitable that the debate should centre on the Scottish Daily Express, although the subject of the debate is the newspaper industry in general in Scotland. We are fortunate that the other business of the House ended early, and that thus we are able to discuss for well over two hours what is a most important subject. I should like to deal briefly with some of the problems of the newspaper industry in general in Scotland as well as the problem of the Scottish Daily Express.
I acknowledge the expertise of the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), but it was rather presumptuous of him to shift the blame,

as he did so articulately, from Beaver-brook Newspapers to the Labour Government. The Government have no responsibility for the collapse of Beaver-brook Newspapers. To suggest, as the hon. Gentleman did, that the responsibility was the Labour Government's is to stretch credulity a bit too far.

Mr. Reid: If the hon. Gentleman understood me to say that, I apologise. What I said was that the responsibility was clearly that of the management groups in Beaverbrook Newspapers. but I hoped for a responsible statement from the Government tonight which might give hope to the workers concerned in Glasgow, and I said that in the event of no statement being forthcoming some responsibility for the redundancies would be at the Government's door.

Mr. Ewing: I am grateful for that retraction. The hon. Gentleman said that no Labour Government could afford to allow the Scottish Daily Express to close. and clearly implied that the responsibility for the newspaper's situation was the Government's. That is not so. But I am not entering into a debate with the hon. Gentleman now. He has had his chance already.
I can understand the hon. Gentleman's bitterness over the Scottish Daily Express. I share it. The hon. Gentleman has had two misfortunes. He worked for the newspaper and, as a member of the Labour Party until seven weeks ago, was, like me, a victim of the propaganda that the Scottish Daily Express puts out against the Labour Party. Therefore, I can understand the hon. Gentleman's double disappointment at the folding of the Scottish Daily Express.
The readership of all newspapers in Scotland, and not only of the Scottish Daily Express, is now subsidising the advertisers in those newspapers. That is a dangerous situation which has not prevailed before. The emphasis was always the other way round, in that those who took advertising space in newspapers in Scotland subsidised the readership. It is only over the past year or two that the situation has changed, because of the increase in the cost of newsprint and the decline in advertising revenue.
My hon. Friend the Member for Paisley (Mr. Robertson) rightly said that the


decline in advertising revenue has been caused primarily by the advent of commercial television and local commercial radio. I am not necessarily criticising those media, but there is only a certain amount of advertising revenue to go round, and it is natural that if television and radio attract advertising revenue, particularly because of their instant impact, there is so much less for the newspapers. That situation must be included in the wide-ranging inquiry for which we are asking.
I turn briefly to the monopoly supply of newsprint. I was glad that my hon. Friend the Member for West Lothian (Mr. Dalyell) raised the matter. I referred to the matter when the statement was made last week. There is a monopoly supply of newsprint and of printing ink. If we are to deal with the serious situation that prevails not only within the Express group but within other newspapers, and throughout the United Kingdom, it is necessary that we should consider that monopoly situation.
For my sins I happen to be the secretary of the Scottish Parliamentary Labour Group. When we heard first of the calamity that had befallen the Scottish Daily Express we took instant action. We met journalists from the paper as did other parties. That night I sent a telegram to Sir Max Aitken. I asked for delay in the implementation of the decision for at least three or four weeks. That telegram was sent a week ago last Wednesday and to date I have not received an acknowledgment. That is typical of the disdain with which Sir Max Aitken is treating his employees in Glasgow.
The Scottish Parliamentary Labour Group, along with other groups, sought to meet many other people who are concerned with the problem. We have had extensive discussions, as others have had. My hon. Friend the Member for Glasgow, Provan (Mr. Brown) attended a rally in Scotland, as did other hon. Members, to assure the journalists and others who work in Albion Street that the support of the House was behind them in an attempt to find a solution to the problem. All those attempts have been frustrated by Beaverbrook and by Sir Max Aitken. Even the attempt that was announced

tonight by my hon. Friend the Member for West Lothian is equally in danger of being frustrated. Beavcrbrook is already on record as saying that the titles of the Scottish Daily Express and the Scottish Sunday Express are not for sale at any price.
The Government should exert the maximum pressure to ensure, first, that the Scottish Daily Express and the Scottish Sunday Express continue to he printed in Glasgow; second, if Beaverbrook does not agree to that, to see that Beaverbrook releases the titles to the employees' consortium which my hon. Friend mentioned.
The men are taking on a monumental task. No one should be under any misapprehension about that. The task which they have set themselves is not easy, and it will not be made any easier if the titles of the papers are withheld and the men have to start publishing new papers with new titles. They require not only management consultancy but a massive public relations exercise to sell the title of a new paper. That is costly in itself. We must begin to think in terms of £5 million before the paper gets off the ground.
My hon. Friend the Member for South Ayrshire referred to the attempt by Sir Max Aitken and by Jocelyn Stevens to divide the works of Glasgow, Manchester and London. I believe that Glasgow is over the first stage and that for Jocelyn Stevens to say to Manchester and London, "Ditch Glasgow to save Manchester" is a deception of the lowest kind. That is because of the guarantee that in a year's time people will be saying to London, "Ditch Manchester to save yourselves".
We were told when the journalists saw us last week that if the Beaverbrook Press could get a 1p increase in cover charge this would yield £5 million and tide it over the immediate difficulties. Immediately this light began to appear at the end of the tunnel the Beaverbrook Press torpedoed it by saying that £5 million, would mean only a stay of execution. It has been obvious from the start—for many months, perhaps even years—that, no matter what happens, the Beaverbrook Press is determined to close down its Glasgow operations.
The impact of closure goes beyond the newspaper world. I have a constituency interest in the matter. The newsprint for the Beaverbrook Press's Glasgow operations, 50,000 tons a year, comes through Grangemouth docks. The closure will not mean a job loss in the docks. They will handle that much less cargo, but, no doubt, because of their keen and outward-looking attitude, the newsprint will be replaced by other goods. But what about the drivers who transport the newsprint from Grangemouth to Glasgow? Many other issues have to be considered when discussing the possible closure of the Beaverbrook Press's Glasgow operation.
One can well imagine what tomorrow's Scottish Daily Express's headlines will be about the new Labour Government, and it is ironic that on Budget night, of all nights, we are pressing for something to be done to save the paper. Listening to the debate, I recall what my father said when I was a small boy. He was an ardent Socialist and used to say that the best thing ever in the Scottish Daily Express was the fish supper. I do not disagree with that view, but it hurts me deeply that 1,800 specialised jobs in Glasgow are to be lost. They cannot be replaced. It hurts me deeply to know that the port in my constituency will have less cargo to handle as a result of a decision taken by Mr. Jocelyn Stevens and Sir Max Aitken.
I believe that we as a Government have a responsibility to examine not only this immediate question but the whole of the Press and its activities, including its forward planning, because I doubt the ability of some of the Press to plan forward. We have a responsibility to make sure that the phase we are going through at the moment will not recur. We have a responsibility to take suitable Government action in order to avoid a recurrence.
This is not an easy problem—if it were, it would have been solved long ago —but Governments are elected to govern, and unpleasant problems very often land in their laps. I have no doubt that, in the very difficult situation in which we find ourselves, our Government will respond, and if, at the end of the day, the Scottish Daily Express in Glasgow does close it will not be the fault of the Labour Government, because the evidence

will show that no Government could have tried harder. My right hon. Friends have been involved in discussions with the Beaverbrook Press, and if its Glasgow operations close down the responsibility will be fairly and squarely on the Beaver-brook Press, and Scotland, Great Britain and this House should know it.
I add my voice to the appeal made by so many hon. Members that, as soon as it is humanly possible, the widest-ranging inquiry into the newspaper industry be set up by the Government before we are faced with more tragedies of this kind.

9.50 p.m.

Mr. Teddy Taylor: I join with those who have expressed their gratitude to the hon. Member for South Ayrshire (Mr. Sillars) for ensuring that we had a good long debate on this vitally important subject. We have had a clear expression of opinion from almost all parties in the House—no doubt the Liberals would have expressed the same view if they had been here. We are deeply concerned about this question and want every possible avenue to be explored.
Although I do not now have an interest in this matter, I once did, because for about eight years I worked for Beaver-brook Newspapers writing a column for the Evening Citizen. [Interruption.] I am sorry that the hon. Member for Glasgow, Provan (Mr. Brown) seems to think that some of those who printed my articles did not find them any more agreeable than some who read them. We are all agreed that even those who have found the opinions of Beaverbrook Newspapers unacceptable, perhaps offensive, to some degree, take the view that it is most important for the health of the Scottish Press that those views should be expressed clearly and that we should have a variety of opinions expressed by the Scottish Press.

Mr. Hugh D. Brown: The hon. Gentleman should not put words like that into my mouth or anyone else's mouth. What we stressed was that we were united in trying to save these jobs and that we also hoped that there might be a greater degree of impartiality. That is slightly different from what the hon. Gentleman has said.

Mr. Taylor: Some of us take the view that different papers interpret impartiality in different ways. I am sure that


we could have a debate about various papers, but it would be wrong to talk about the views expressed by a particular newspaper in a debate of such urgency. We are all at least agreed that if something can be done to save these jobs we should do all in our power to save them.
It is no easy problem for the Government. We had a similar problem in Glasgow when there was a desperate situation in the shipyards and all the economic arguments pointed to those yards being plunged into financial disaster. We had to take special action to save them. They are now prospering. While the financial situation in any organisation might appear to be desperate at a given moment, times can change dramatically. If something can be done to bring about a viable future for these newspapers and ensure that they continue to be printed in Scotland, it should be fully investigated.
I have four questions for the Minister. The first deals with the financial plight of Beaverbrook Newspapers. We have had a fairly detailed statement from the company about its opinion of the seriousness of the problem. It has said that if this closure does not take place and if it does not sell the goodwill of the Evening Citizen the whole organisation could go bust within months. This view has been clearly expressed by the company, but many people inside and outside the House have doubted it.
It would be helpful if the Minister could tell us whether the information given to Ministers, including the Prime Minister, during the discussions that have taken place give any grounds for doubting that this is the position. It is possible that the firm has adopted an unduly pessimistic attitude.

Mr. Dalyell: The hon. Gentleman seems to be asking this question from a basis of pristine innocence. I imagine that he may not know anything about it because he was in office for only a short time. Is it not a fact that when he was in Government his right hon. Friend the Member for Worcester (Mr. Walker) and the Department of Trade and Industry received approaches from Beaverbrook Newspapers and its hankers, Lloyds? Were they not fully in the picture?Is it not just a little short to pretend that all this has hap-

pened in the last three weeks? The former Government knew a great deal about it.

Mr. Taylor: I have not pretended anything. I know that some years ago the Glasgow evening newspapers formed the subject of merger talks. I was concerned in speaking to one of the gentlemen involved with that project. That was a long time ago. We all know that there are special financial problems here, because Glasgow is the only city outside London with two evening newspapers.
It would be helpful if the Government would indicate whether they share the view of Beaverbrook Newspapers about the nature of the financial crisis that it is facing.
My second question relates to the merger between the Glasgow Evening Times and the Evening Citizen or the approaches of Scottish Universal and the good will of the Evening Citizen. understand that the merger is subject to Government approval. Under the Fair Trading Act I understand that the merger will not go ahead if the Government do not approve it. Will the Minister say whether that is the position and what are the criteria for deciding whether such approval should be given?
I appreciate that that is not an easy question. If approval were not given cash would not be available from Scottish Universal for redundancy payments for the men who will be put out of work. On the other hand, if approval is given, we appreciate that Albion Street cannot be viable without an evening newspaper as well as a morning one Will the Minister say whether Government approval is required and what criteria are involved in the giving or withholding of approval?
My third question relates to the viability of the Press as a whole. It has been suggested that Beaverbrook Newspapers has been incompetent in getting into its present financial position, but many newspapers are losing a great deal of money, some of them not far away from Albion Street Even firms with new equipment and new offices, and using modern techniques, are losing money by producing newspapers. Certain newspapers are carried by the other activities of the firms which own thems.
Much of the difficulty has been precipitated by the increase in the cost of newsprint. I appreciate that Governments and many who are involved in the Press would object to, or regard as a dangerous precedent, a subsidy to a particular newspaper, but the possibility of providing a newsprint subsidy to the Press as a whole which would be of universal application is worth investigating if it would provide a viable solution. That is a new factor which might influence Beaverbrook Newspapers to reconsider the whole position of its operations in Scotland and England, but that solution could be investigated only if we had time. Time is of the essence. Unless there can be a delay in the closure of these newspapers any general arrangement of that sort cannot be investigated fully with a view to solving the problem of the 1,800 jobs.
The answer is for hon. Members and the Government to use all possible influence to try to persuade Beaverbrook Newspapers not to close its Scottish newspapers at the time it has specified, but to delay for two, three or four weeks to enable us to have a full investigation into the question whether a newsprint subsidy could create a viable situation in Glasgow. Any such solution should at least be considered carefully and discussed with Beaverbrook Newspapers.
From our experience of other firms which have been in difficulty—the Upper Clyde Shipbuilders is a good example—it may be said, as the Conservatives said of Upper Clyde, that there is no prospect at any time of the firm being viable, yet circumstances may change dramatically and within six months the firm may become viable because of factors outside normal circumstances.
I am not suggesting that responsibility lies squarely with the Government or with anyone else. Many factors are involved —Beaverbrook Newspapers management, workers and the people who buy the newspapers. Everyone is involved in this tragic situation. It is important not to allocate blame but to try to find a solution which may be the means of saving as many jobs as possible. I hope that the Government will turn their mind to this aspect and will fully investigate the possibility of obtaining a breathing space to enable us to look at some means of pro-

viding a secure future for the employment of workers in Beaverbrook Newspapers and also of preventing such a tragic situation occurring again.

It being Ten o'clock, the motion for the adjournment of the House lapsed, without Question put.

Motion made and Question proposed, That this House do now adjourn.—[Mr. James Hamilton.]

10.0 p.m.

The Under-Secretary of State for Trade (Mr. Eric Deakins): Hon. Members in all parts of the House are grateful to my hon. Friend the Member for South Ayrshire (Mr. Sillars) for initiating this debate. It has gone on much longer than anybody expected, but that is not a bad thing in the circumstances.
The, subject of newspapers in Scotland has been brought sharply to our notice in recent days. What is happening is a matter of grave concern to us all. For that reason. I am glad to see so many Scottish Members present, particularly my Scottish Labour colleagues, on this important occasion. We have an unusually large 'attendance for an Adjournment debate when normally the only participants would be the hon. Member raising a subject and the Minister who is to reply.
As my hon. Friend's speech showed, there is a great deal to cause immediate concern in the current developments in Glasgow. The urgency of the situation has been reflected in speeches from hon. Members in at least three parties in the House. I understand the concern, and I shall do my best to deal with many of the issues that have been raised. I shall have more to say about them in a moment. Since we are dealing with the subject of newspapers in Scotland, I shall spend a few moments dealing with the Press of Scotland as a whole.
The market for newspapers in Scotland is a reflection of, and a response to, a readership which has its own unique traditions and character, yet also shares in a wider community. Britain as a whole has a large and varied Press, compared with many other countries in Western Europe, including nine daily newspapers and seven Sunday newspapers. These are national newspapers, but they include Scotland in their coverage and


circulate widely, some of them—such as the Scottish Daily Express and the Sunday Express—have a specific coverage in the form of Scottish editions.
Then Scotland has its own morning, Sunday, evening and weekly newspapers. Although it might be invidious to single out examples of particular newspapers, I should point out that both Glasgow and Edinburgh produce daily newspapers whose standing is recognised well beyond the borders of Scotland. The pattern of dailies and Sundays is much the same.
The feature of the British Press which the whole House recognises, is the strength and variety of its local newspapers, which have not figured largely in this debate, which is basically a debate about national newspapers in Scotland. I have in mind the weekly, sometimes twice weekly, local newspaper which, although not ignoring national issues, focuses on issues and events of particular concern to its own community. With the growth of local awareness and aspirations the service that local newspapers provide is of great importance, and we should not forget it.
Scotland has approaching 140 weekly newspapers, serving counties and towns, large and small. There are two groups, which have a number of newspapers running to double figures, the larger amounting to some 20 newspapers, and both are nowhere near being monopolies. I shall say more about monopolies later.
When in 1970 it looked at particular mergers among local newspapers, the Monopolies Commission discovered that two-thirds of Scottish weekly newspapers were jointly owned with at least one other weekly newspaper, but there were no large groups under one owner. In round figures, the total circulation of these newspapers was about one million in a population of 5 million, which is a very good figure. Individual circulations vary between 50,000 and very small numbers.
There is an underlying feeling, which has been behind some of the comments of hon. Members tonight, that gradually newspaper ownership is changing in a way which means more newspapers in fewer hands. This is a large subject and one to which I cannot do justice now. But looking at dailies, Sundays, evenings and weeklies in Scotland and throughout Britain, one sees that there is

a wide range of ownership. Some people own quite a few, some a handful and some only one or two. However, it is not meaningful to tot up numbers and to make a judgment on that alone. Being part of a group or becoming incorporated in a group is not necessarily a loss to a locality. A group's resources can help to revitalise an ailing local newspaper.
An important consideration is whether there is editorial freedom and whether such freedom is reasonably assured for the future. The need for this is widely accepted, and there are special statutory provisions which were first enacted in the monopolies and mergers legislation and re-enacted under the Fair Trading Act 1973 to ensure that full and careful consideration is given to all mergers.
To take up a specific question asked by the hon. Member for Glasgow, Cathcart (Mr. Taylor), the merger approval procedure is laid down in one of the sections of that Act and the Government have a responsibility to give a decision one way or the other on whether there should be a reference to the Monopolies Commission. This is a matter for my right hon. Friend the Secretary of State for Prices and Consumer Protection, and currently she is urgently considering the merger application which has been made to her.
I turn to the real subject of the debate —the developments in Glasgow which have concerned us all. There are two distinct aspects. The narrower is the merger aspect of the Glasgow Evening Citizen and the Glasgow Evening Times. My right hon. Friend the Secretary of State for Prices and Consumer Protection is considering this within the framework of the special provisions for newspaper mergers which I have just mentioned.
The wider and more important aspect is the Beaverbrook group's intentions involving the printing of their two newspapers, the Sunday Express and the Daily Express, in Manchester. It is this that specifically threatens the jobs of 1,800 people in Glasgow.
It is a complicated and difficult story. However, the Beaverbrook group is clear on one matter, namely, its intention to retain the separate identity and character of its two Express newspapers. It is the group's considered commercial judgment


that this can be achieved only if the printing is done in Manchester.

Mr. Sillars: Is my hon. Friend aware that it is impossible to move the printing and the heart of a newspaper from Glasgow to Manchester and retain the Scottish character of that newspaper? We do not argue on a theoretical basis. Several events of the past point to that being the case.

Mr. Deakins: I take my hon. Friend's point, and I have no doubt that the future Scottishness of the Expresses, if they should be transferred to Manchester, will be very much a matter for the Scottish people themselves to judge.
The Express group feels that it can retain the separate identity and character of the two newspapers. I shall not comment on that, since it is very much a commercial judgment.

Mr. Reid: At present, edition times in Glasgow are such that newspapers are rolling off the presses day and night. This allows stories to be carried deep into the night. If the printing is done in Manchester, it means that the papers will not carry the news of a fire or a late football story. How can news of that kind be transmitted to the Scottish reader?

Mr. Deakins: I cannot answer for the Beaverbrook management. That is between the group and its future readers and those who work for it. However, it is the considered commercial judgment of the group that the separate identity and character of the two newspapers can be retained only if the printing is done in Manchester.
We in the Government have been having long, hard and anxious talks with all the interests involved, including unions and management and in particular the Scottish TUC. This is a serious matter, because we realise what it means for the 1,800 employees faced with redundancy. My right hon. Friend the Secretary of State for Scotland has taken the closest possible interest and, with the rest of us, has spent much time and effort assisting in these talks.
The House will recall that my right hon. Friend the Secretary of State for Trade made a statement on this matter

on 19th March and that he has promised to keep the House informed. He will be making a further statement this week. Therefore, I am not in a position tonight to go into all the close and narrow details of the closure, or the projected closure of the printing works in Glasgow. I assure the House that I have carefully noted all the points that have been made, many of which have already featured in the Government's discussions with both the unions and management. However, there are some issues of wider interest with which I can deal tonight.

Mr. Harry Ewing: In view of the statement by my hon. Friend the Member for West Lothian (Mr. Dalyell) about the possibility of an employees' enterprise, will my hon. Friend undertake that this matter will be raised with his right hon. Friends the Secretary of State for Trade and the Secretary of State for Scotland as early as possible tomorrow morning in order that it may be given the fullest possible consideration?

Mr. Deakins: I have no hesitation in giving my hon. Friend that assurance, without any reservations whatever. We have at all times been willing to consider suggestions as they have come up. Indeed, some have come up only in the past few days because of the speed of events.

Mr. Dalyell: This is critically important. In addition to what my hon. Friend has said, may I suggest that there should be Government pressure on the Beaverbrook organisation to live up to its moral, if not its legal, obligations not to put hindrances in the way of such an enterprise? Surely it has a moral obligation to open its books and to disclose its internal operations, even if it is reluctant to do so for what appear to be commercial reasons.

Mr. Deakins: I shall deal later with the workers' co-operative, which has come up somewhat late in the day. I should like to deal with some of the other points first. However, I assure my hon. Friend that I shall not neglect that.
The first wider observation is the short time between the announcement by Beaverbrook Newspapers of the closure and the projected date of the closure in Glasgow. That point was particularly made by my hon. Friends the Members


for South Ayrshire and Glasgow, Provan (Mr. Brown). The time was short, but it was Beaverbrook's considered view that it was necessary to minimise the loss to the group, a loss which would have had serious consequences not only for those who might be losing their jobs, but for the group's future. The action and the short notice is for the Beaverbrook group to defend to its employees. However, it has presented considerable problems both to workers and to those concerned with getting a solution to the problems.
The second matter on which I should like to comment is that of redundancy terms, mentioned by my hon. Friend the Member for South Ayrshire. On occasions of redundancy there are certain basic statutory requirements. If the worst happens, what can be done is a matter between Beaverbrook Newspapers and the employees. However, I understand that the group has made proposals which involve using the purchase price of £2¾ million for the Evening Citizen and a good deal more. These are complicated matters and I do not wish to pursue them in detail tonight.
In nearly all the speeches tonight the twin issues of a newsprint monopoly and newsprint prices have been raised. First I deal with the newsprint monopoly issue, raised by my hon. Friends the Members for South Ayrshire, West Lothian (Mr. Dalyell) and Stirling, Falkirk and Grangemouth (Mr. Ewing). This issue is more directly a matter for my right hon. Friends the Secretary of State for Prices and Consumer Protection and the Secretary of State for Industry. However, I can say that there are only two producers of newsprint in the United Kingdom. Therefore, this is a problem not so much of monopoly as of the prices of newsprint and prospects which have not encouraged investment.
Newsprint production has been barely profitable. In 1973, demand for newsprint increased sharply and world prices rose, and they are still rising, reflecting oil prices and other factors. The newsprint problem is worldwide, but Departments are discussing the availability and supplies of newsprint with United King. dom manufacturers and users.
I now come to the issue of newsprint prices. This, again, is not just a United Kingdom problem but a worldwide one.

There has been a large increase in demand in the last 18 months, just, at a time when production in the United Kingdom has been declining. Even against that background, however, United Kingdom prices are, if anything, lower than world prices, though they have increased substantially and, like all prices, could go higher. This is a world factor for the future.
A further point raised by my hon. Friend the Member for South Ayrshire was that of public participation in Glasgow newspapers, but this was not pursued by other hon. Members. The Government share the grave concern about the loss of jobs in Glasgow, but the issue of public participation in Glasgow newspapers or in Beaverbrook Newspapers raises some large questions, which might more profitably be the subject of any inquiry that might take place—and I shall come to the issue of an inquiry.
My hon. Friend the Member for West Lothian referred to a workers' cooperative. This is fresh news tonight, that that is what the workers at the Glasgow printing works in Albion Street want. I do not doubt the good intentions behind such a suggestion, but I feel bound to say that it would be a large and possibly risky undertaking which would need to be thought through very carefully by all concerned. I have given my hon. Friends an assurance that the first thing tomorrow morning I shall draw the attention of my right hon. Friends the Secretaries of State for Scotland and for Trade to this suggestion, and the House can rest assured that we shall pursue it as we see fit.
Another matter raised was that of a monopoly in the Glasgow evening newspaper situation. It is a fact that, apart from Glasgow, only London supports two evening newspapers. There have been many mergers since the war. The trend everywhere has been towards a single evening paper. This need not create a real monopoly situation if there is continued competition from weekly newspapers, morning papers and local radio. Some people may even feel that it is better that there should be one strong newspaper, given editorial freedom, than two ailing local newspapers.
I now come to the crux of the debate. Recent developments have focused much attention on Scotland, but the problems


that have been illustrated so starkly in the speeches of virtually all those who have taken part in the debate are, unfortunately, of wider application than just to Scotland.
The particular problems of a newspaper industry are known. There is always the question how far an industry can put its own house in order—this came up during the question and answer session following my right hon. Friend's statement to the House on 19th March —but in this case solutions must be based on a thorough examinaion of its own busines by the industry itself, and by that I do not mean merely management. All those who are concerned about the industry, and particularly those whose livelihood is affected, should be involved.
All industries may look at themselves, but with newspapers there is an extra dimension. There is the special problem of maintaining our tradition of a free Press, which is the safeguard for a free society. This has always been vital, but perhaps more so today when it is so much under challenge.
I repeat my assurance that I have noted the detailed suggestions about the closure of the printing works in Glasgow. They will be taken fully into account, as indeed many already have been in the past 10 days of intensive discussions, in the Government's thinking. The Prime Minister said last week that he would consider whether an inquiry was now appropriate. The Government are still considering this matter, but I am sure that my right hon. and hon. Friends will take note of the strong sentiments of Scottish Members on this wider issue.
The task for all of us—not just politicians but management and unionists—is to learn from the lessons of the past and the present and then to do our level best to achieve a soundly-based Press, free and independent, which can continue to provide a service responsible to the loyalty of its readers. I am sure

that we all share that aim, whatever our differing views on the means of achieving it. If there is to be any inquiry, I am sure that this will be one of its main themes.

Mr. Dalyell: Would my hon. Friend bear two points in mind? First, if it were simply a question of supplying central Scotland, that might be done semi-satisfactorily from Manchester. But it is a question of supplying, the North and the Borders, and that is not feasible from Manchester. Secondly, many of us on this side would like the Government to be tough with the Beaverbrook organisation in requiring it to live up to its moral obligations. It is not just a question of 1,900 men, but of drivers and people working in the docks in Grangemouth. This closure will ripple around the Scottish economy. Could it be brought home to Beaverbrook newspapers that, whatever their legal obligations, there are moral obligations which would make it totally disagreeable of them to do anything to frustrate the intentions of the employees' enterprises?

Mr. Deakins: The feasibility—I am not talking about profitability but about whether it is practicable—of the operation from Manchester is a matter for commercial judgment of Beaverbrook Newspapers, and they must stand or fall by their decision. As for moral obligations, my hon. Friend will obviously expect a Labour Government and Labour Ministers in their discussions with any industrialist on a sad occasion such as this and in such a grave situation to emphasise to employers their moral as well as their statutory obligations. Of course they should not indulge in sabotage. I cannot go into the details of the discussions that have been going on—they were going on again today—but this point will be brought out in the statement to be made this week by the Secretary of State for Trade.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Ten o'clock.